Chapter 9 - Factor Analysis

Abstract

Factor analysis (FA) is a multivariate technique that is used to describe the relationships between different variables under study (observable variables) with new variables called factors, where the number of factors is less than the number of original variables. FA works efficiently and produces fewer factors to describe the relationship if the variables under study are highly correlated. For instance, if all of the variables in one group are highly correlated among themselves and have little correlation with the variables in the remaining groups, each group can represent a factor. FA is considered an extension of principal component analysis since the ultimate objective for both techniques is a data reduction. The concept of FA is supported by two examples and step-by-step analysis and interpretation of the results to explain how to apply FA and how to draw conclusions from the output obtained by using R commands.