Can I Correlate the Error Terms of Two Unobservable Constructs in a Full Structural Model?

The majority of the time, correlating error terms of unobservable constructs is not permis- sible, but there are some exceptions. If two constructs are systematically correlated with one another but not causally correlated, then you can correlate the error terms. This would be where two constructs are highly correlated with one another but not dependent on one another.Again, very rarely will you allow the error terms of unobservable constructs to covary.

Source: Thakkar, J.J. (2020). “Procedural Steps in Structural Equation Modelling”. In: Structural Equation Modelling. Studies in Systems, Decision and Control, vol 285. Springer, Singapore.

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