Factor analysis is a sophisticated statistical method that is primarily used to reduce a large number of variables into a smaller set of factors. This technique is valuable for extracting the maximum common variance from all variables, transforming them into a single score for further analysis.
As a part of the general linear model (GLM), factor analysis is predicated on certain key assumptions such as linearity, absence of multicollinearity, inclusion of relevant variables, and a true correlation between variables and factors.
Consequently, PCA is the most widely used technique. Specifically, it begins by extracting the maximum variance, assigning it to the first factor. Subsequent factors are determined by removing variance accounted for by earlier factors and extracting the maximum variance from what remains. This sequential process continues until all factors are identified.
Preferred for structural equation modeling (SEM), this method focuses on extracting common variance among variables while excluding unique variances. It’s particularly useful for understanding underlying relationships that may not be immediately apparent from the observed variables.
Based on a correlation matrix, image factoring employs ordinary least squares regression to predict factors, This approach, therefore, sets it apart in its approach to factor extraction.
This technique, on the other hand utilizes the maximum likelihood estimation approach to factor analysis, starting with the correlation matrix to derive factors.
Including Alpha factoring and weighted least squares, these methods, therefore, offer alternatives that may be suitable depending on the specific characteristics of the data set.
Moreover, factor loadings play a crucial role in factor analysis, as they represent the correlation between a variable and the factor. In general, a factor loading of 0.7 or higher indicates that the factor sufficiently captures the variance of that variable. Consequently, These loadings help in determining the importance and contribution of each variable to a factor.
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The number of factors to retain, however, can be determined by several criteria:
Rotations in factor analysis, whether orthogonal like Varimax and Quartimax or oblique like Direct Oblimin and Promax, help in achieving a simpler, more interpretable factor structure. These methods adjust the axes on which factors are plotted to maximize the distinction between factors and as a result, improve the clarity of the results.
Factor analysis, therefore, a powerful tool for data reduction and interpretation. It not only enables researchers to uncover underlying dimensions or factors that explain patterns in complex data sets. By adhering to its assumptions and appropriately selecting factor extraction and rotation methods, researchers can effectively simplify data, construct scales, and as a result, enhance the validity of their studies.
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