Exploratory Factor Analysis

(EFA)
 Key points
01 Introduction to Exploratory Factor Analysis (EFA)

02 Objectives
Objectives
03 Assumptions
Principal component analysis and Common factor analysis
Assumptions
04
Principal component analysis and Common factor analysis
05 Interpreting the factors
 Introduction
• Factor analysis is a statistical method of data reduction.
It is used to study the dimensionality of a set of vari-
ables.
• It reduces a large number of overlapping variables to a
smaller set of factors that reflect construct(s) or different
dimensions of construct(s).
• Take many variables and explain them with a few
“factors” or “components”
 Introduction
• Correlated variables are grouped together and separated from
other variables with low or no correlation
• These variables with high intercorrelations could well measure
one underlying variable, which is called a “factor”.
 Objectives
• Specifying the unit of analysis
• Achieving data summarization versus data reduction
• Variable selection
• Using factor analysis with other multivariate techniques
 Assumptions in Factor Analysis
• Conceptual issues
→ underlying factor analysis relate to the set of variable
selected (some underlying structure does exist)
• Statistical issues
→ Substantial no. of correlations > 0.30 in correlation matrix
→ Bartlett test of sphericity
→ Kaiser-Meyer-Olkin (KMO) test 
• Sample size
 Methods of Factors extraction

• Principal component analysis

considers the total variance and derives factors that contain small proportions
of unique variance and, in some instances, error variance.

• Common factor analysis

considers only the common or shared variance, assuming that both the unique
and error variance are not of interest in defining the structure of the variables.
 Interpreting the Factors
• Examine the factor matrix of loading/rotated factor matrix
• Identifying the significant loading
• Re-specify the factor model if needed
• Naming the factors