Abstract
Determining whether measures are equally valid for all individuals is a core component of psychometric analysis. Traditionally, the evaluation of measurement invariance (MI) involves comparing independent groups defined by a single categorical covariate (e.g., men and women) to determine if there are any items that display differential item functioning (DIF). More recently, Moderated Nonlinear Factor Analysis (MNLFA) has been advanced as an approach for evaluating MI/DIF simultaneously over multiple background variables, categorical and continuous. Unfortunately, conventional procedures for detecting DIF do not scale well to the more complex MNLFA. The current manuscript therefore proposes a regularization approach to MNLFA estimation that penalizes the likelihood for DIF parameters (i.e., rewarding sparse DIF). This procedure avoids the pitfalls of sequential inference tests, is automated for end users, and is shown to perform well in both a small-scale simulation and an empirical validation study.