Abstract
This chapter examines factor analysis, which is used to test whether a set of observable or manifest variables can measure one or more unobservable or latent constructs that they have in common. Such constructs are called factors. Factor analysis is therefore a data reduction method. In its foundation period, factor analysis was often applied to the study of general intelligence and mental abilities. Nowadays factor analysis is a workhorse for quantitative research in the social sciences, humanities, and natural sciences. There are two types of factor analysis: exploratory factor analysis and confirmatory factor analysis. Exploratory factor analysis is used for examining the underlying structures in a set of variables. Confirmatory factor analysis is used to test theoretical hypotheses; the researcher assumes that variables are interrelated in a specific way and uses factor analysis to find out whether the assumption is supported by the data — i.e. to what extent the data fits the predefined structure.
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