Question

Give an example to explain how factor analysis can be useful in Multivariate data?

Answer 1

Factor analysis is useful when the quantity to be analysed cannot be measured directly. This quantity is therefore measured by recording other related measurable quantities.

And finally out of the measured quantities, we construct the actual variable of interest.

For example, we want to speak about a person's language skills.

Now, language skills includes a number of sub skills like reading, writing, speaking skills.

How good or bad a person's language skills are cannot be measured directly (unlike things like height, weight, etc. which can be measured directly via some scales)

Therefore, to find out about a person's language skills, s/he is advised to undergo standard tests. These tests have sub-sections which measure a person's reading ability, writing ability, speaking ability.

Based on the score on the test, we conclude about how good a person is when it comes to languages.

Thus the factors to measure the immeasurable quality language skills are the persons reading, writing and speaking abilities.

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