The Influence of Sample Size on Parameter Estimates in Three-Level Random-Effects Models

In educational psychology, observational units are oftentimes nested within superordinate groups. Researchers need to account for hierarchy in the data by means of multilevel modeling, but especially in three-level longitudinal models, it is often unclear which sample size is necessary for reliable parameter estimation. To address this question, we generated a population dataset based on a study in the field of educational psychology, consisting of 3000 classrooms (level-3) with 55000 students (level-2) measured at 5 occasions (level-1), including predictors on each level and interaction effects. Drawing from this data, we realized 1000 random samples each for various sample and missing value conditions and compared analysis results with the true population parameters. We found that sampling at least 15 level-2 units each in 35 level-3 units results in unbiased fixed effects estimates, whereas higher-level random effects variance estimates require larger samples. Overall, increasing the level-2 sample size most strongly improves estimation soundness. We further discuss how data characteristics influence parameter estimation and provide specific sample size recommendations