What Is Factor Analysis?

What is Factor Analysis?

Factor Analysis is a statistical tool used for examining the relationships for complex variables that are hard to measure. By using factor analysis, researchers can measure concepts that are difficult to determine. For example, when measuring the variance in 3 variables, it is possible that the variations are due to variations in an unobserved variable called a factor.

What is a Factor?

A factor is a broad variable this is an “umbrella” over many other variables. Many of these other variables under the umbrella are all associated (and correlated) with the factor. A common example of factor analysis that many statistics textbooks use is socioeconomic status. If a survey was taken asking about income, education, and occupation, those who have the same socioeconomic status are likely to answer similarly on questions concerning income, occupation, and education. This is somewhat intuitive, as people who have low income and education are likely to be classified in a lower socioeconomic status.

One of the key points of factor analysis is correlation. In the example of socioeconomic status, occupation, income, and education are all tightly correlated. One’s education will be a main factor in determining occupation, and one’s occupation is a key factor in determining income. These variables are also correlated with their socioeconomic status. By doing a factor analysis, we can explain how much of the variance of the variables is explained by the overarching factor. When doing a factor analysis, there are the same amounts of factors as variables.

Approaches to Factor Analysis

When it is unknown as to how many factors are included in a set of variables being studied, it is “exploratory factor analysis”. It is used to learn how many variables might be related and to find out the underlying factor structure. One example is when scores on an oral presentation and an interview exam could be placed under a factor called ‘communication...