Aims, Ideas, and Models of Factor Analysis

Factor analysis is a generic term that we use to describe a number of methods designed to analyze interrelationships within a set of variables or objects. Although the various techniques differ greatly in their objectives and in the mathematical model underlying them, they all have one feature in common, the construction of a few hypothetical variables (or objects), called factors, that are supposed to contain the essential information in a larger set of observed variables or objects. The factors are constructed in a way that reduces the overall complexity of the data by taking advantage of inherent interdependencies. As a result, a small number of factors will usually account for approximately the same amount of information as do the much larger set of original observations. Thus, factor analysis is, in this one sense, a multivariate method of data reduction.