Cronbach's α (Reliability of data)

and
Factor Analysis (Construct
Validity)
 Reliability of Data
• Reliability, like validity, is a way of assessing
the quality of the measurement procedure
used to collect data in a research.
• In order for the results from a study to be
considered valid, the measurement procedure
must first be reliable.
• Cronbach's α is a measure of reliability
 Good
Reliability
If interested…
 Helps improve reliability,
P a value of greater than
0.3 is ok.
P

Helps improve reliability,

by telling us what item
could be removed
If item 1 is removed then the α will be 0.911
(but this is less than 0.916), item 2 removed -
α will be 0.909 and so on. By removing ‘young’
α improves to 0.917
In the Inter-Item Correlation Matrix we look for
items with lesser correlation with other items. Is so
those items could be removed to improve reliability
Factor Analysis
 Factor Analysis
• Is a Interdependency Technique
– Seeks to find the latent factors that account
for the patterns of collinearity among
multiple metric variables
• The purpose of factor analysis is to
reduce multiple variables to a lesser
number of underlying factors that are
being measured by the variables.
 Major types
• Principle components analysis (PCA)
• Common factor analysis
Principal component analysis involves extracting
linear composites of observed variables.
Common Factor analysis is based on a formal
model predicting observed variables from
theoretical latent factors.
They typically yield similar substantive
conclusions. This explain why some statistics
packages seem to bundle them together.
 • In terms of a simple rule of thumb,
1. Run factor analysis if you assume or wish to
test a theoretical model of latent factors
causing observed variables.
2. Run principal component analysis If you want
to simply reduce your correlated observed
variables to a smaller set of important
independent composite variables.
• PCA is the most commonly used procedure
and the default procedure in SPSS

https://stats.stackexchange.com/questions/1576/what-are-the-differences-between-factor-
analysis-and-principal-component-analysi
 Assumptions
• Large enough sample to yield reliable estimates
of the correlations among the variables
• Statistical inference is improved if the variables
are multivariate normal
• Relationships among the pairs of variables are
linear
• Absence of outliers among the cases
• Some degree of collinearity among the variables
but not an extreme degree or singularity among
the variables
 An intercorrelation Matrix
• Basic assumption:
Variables that significantly correlate with
each other do so because they are
measuring the same "thing".
• The problem:
What is the "thing" that correlated
variables are measuring in common?
 Given nine metric variable …

X1 X2 X3 X4 X5 X6 X7 X8 X9

X1 1.00 0.80 0.70 0.95 0.01 0.20 0.18 0.16 0.03

X2 1.00 0.63 0.75 0.08 0.11 0.13 0.04 0.09
X3 1.00 0.84 0.02 0.12 0.07 0.15 0.05
X4 1.00 0.01 0.11 0.06 0.02 0.13
X5 1.00 0.93 0.02 0.05 0.03
X6 1.00 0.11 0.09 0.02
X7 1.00 0.95 0.90
X8 1.00 0.93
X9 1.00
Notice the patterns of intercorrelation
Variables 1, 2, 3 & 4 correlate highly with
each other, but not with the rest of the
variables
Variables 5 & 6 correlate highly with each
other, but not with the rest of the variables
 Variables 7, 8, & 9 correlate highly with
each other, but not with the rest of the
variables
Deduction: The nine variables seem to be
measuring 3 "things" or underlying factors.
Q What are these three factors?
Q To what extent does each variable
measure each of these three factors?

These questions are not answered by a

Factor Analysis. It just helps to find the
intercorrelation. The researcher, based on
theory should answer the above questions.
• Open SPSS
• Open SoftDrinks.xls file
• Analyse – Correlate – Bivariate
 Why do Factor Analysis?
• Item reduction (Data reduction)
• Many variables explained by fewer factors
• Parsimonious solution explains these
variables or relationships
• To analyse the dimension of your instrument
• Analyse – Dimension Reduction – Factor
 Initial solution reports the starting values of
communalities used (Explained later).

Bartlett's Test of Sphericity - This tests the null

hypothesis that the correlation matrix is an
identity matrix. An identity matrix is a matrix
in which all of the diagonal elements are 1 and
all off diagonal elements are 0. You want to
reject this null hypothesis.
In rotation there are two types
1. Orthogonal rotation and
2. Oblique rotation
Rotations that allow for correlation are called
oblique rotations; rotations that assume the factors
are not correlated are called orthogonal rotations.
orthogonal (uncorrelated) rotations

Oblique rotations
To supress output with
smaller coefficient in the
component matrix
(explained later)
 Kaiser Meyer Olkin (KMO)
Good,
anything
above 0.7
is ok, 0.8
is good
and 0.9 is
great
Bartlett's Test of Sphericity - This tests the
null hypothesis that the correlation matrix is
an identity matrix. An identity matrix is
matrix in which all of the diagonal elements
are 1 and all off diagonal elements are 0.
You want to reject this null hypothesis. Here
we are rejecting the null (otherwise it means something is really
terrible with the data)
 Communalities
• Table of communalities shows the proportion
of each variable’s variance that can be
explained by the factors.
• The communality value which should be more
than 0.5 (till 0.3 is ok too) to be considered for
further analysis. Else these variables are to be
removed from further steps factor analysis.
• Example: For ‘Brand image’ 59.1 of the
variance is explained or accounted for
Any value below 0.3 or
0.4 means that this
item has issues in
correlating with other
items
 Total variance explained
• The Eigenvalue table has been divided
into three sub-sections, i.e. Initial Eigen
Values, Extracted Sums of Squared
Loadings and Rotation of Sums of
Squared Loadings.
• Eigenvalue actually reflects the number
of extracted factors whose sum should
be equal to number of items which are
subjected to factor analysis.
Remember when we were giving the Eigen value we said SPSS to retain only those
with greater than 1. So here all the variable with Eigen value less than one is
excluded.
The results indicate that the 20 variables are reduced to 4 components ie these four
FACTORS do a good job in explaining the 20 variables.
• Initial Eigen Values column shows the % of
variance explained by each individual items in
the questionnaire.
• For analysis and interpretation purpose we
are only concerned with Extracted Sums of
Squared Loadings. This shows the % of
variance explained by each component in the
final factors.
• The factors all together explain only 63.204%
of variance – meaning rest of the variance is
unexplained (meaning - the variables in our study is
inadequate to that level).
 Eigen value
• Eigen values are calculated and used in
deciding how many factors to extract in the
overall factor analysis.
• In matrix algebra, under certain conditions,
matrices can be diagonalized.
• Matrices are often diagonalized in multivariate
analyses. In that process, eigenvalues are used
to consolidate the variance.
• In factor analysis, eigenvalues are used to
condense the variance in a correlation matrix.
• "The factor with the largest eigenvalue has the
most variance and so on, down to factors with
small or negative eigenvalues that are usually
omitted from solutions" (Tabachnick and
Fidell, 1996, p. 646). From the analyst's
perspective, only variables with eigenvalues of
1.00 or higher are traditionally considered
worth analyzing.
 Scree Plot
• Scree plot and Total variance explained Both
deal with factor extraction method and can be
used to determine how many factors to retain.
We want to retain the
components above
the scree
The output without supressing small
coefficients looks like…
Since we are
calling for
rotated Matrix
preference
should be given
for rotated
matrix only
 ü
0.3

The output after supressing small

coefficients with less than 0.3 loadings looks
like…
• We have items distributed among the four
factors.
• Items with no / low factor loading should be
eliminated from the data set.
• Now we can go for using this factor structure
in the excel sheet.
• Only this factor structure should be used for
any further analysis.
END