The impact of nonnormal and heteroscedastic level one residuals in partially clustered data

The multilevel model (MLM) is easily parameterized to handle partially clustered data (see, for example, Baldwin, Bauer, Stice, & Rohde, 2011). The current study evaluated the performance of this model under various departures from underlying assumptions, including assumptions of normally distributed and homoscedastic Level 1 residuals. Two estimating models – one assuming homoscedasticity, the other allowing for the estimation of unique Level 1 variance components – were compared. Results from a Monte Carlo simulation suggest that the MLM for partially clustered data yields consistently unbiased parameter estimates, except for an underestimation of the Level 2 variance component under heteroscedastic generating conditions. However, this negative parameter bias desisted when the MLM allowed for Level 1 heteroscedasticity. Standard errors for variance component estimates at both levels were underestimated in the presence of nonnormally distributed Level 1 residuals. A discussion of results, as well as suggestions for future research, is provided.