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Derivation of Theory by Means of Factor Analysis or Tom Swift and His Electric Factor Analysis Machine

Author

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  • J.S. Armstrong

    (The Wharton School)

Abstract

Problems in the use of factor analysis for deriving theory are illustrated by means of an example in which the underlying factors are known. The actual underlying model is simple and it provides a perfect explanation of the data. While the factor analysis 'explains' a large proportion of the total variance, it fails to identify the known factors in the model, The illustration is used to emphasize that factor analysis, by itself, may be misleading as far as the development of theory is concerned. The use of a comprehensive, and explicit à priori analysis is proposed so that there will be independent criteria for the evaluation of the factor analytic results.

Suggested Citation

  • J.S. Armstrong, 2005. "Derivation of Theory by Means of Factor Analysis or Tom Swift and His Electric Factor Analysis Machine," General Economics and Teaching 0502004, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpgt:0502004
    Note: Type of Document - pdf; pages: 6
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    Cited by:

    1. D Conway & K E Haynes, 1977. "Advances in Comparative Ecological Analysis: Parsimony, Invariance, and Homogeneity in Factor Analysis Solutions," Environment and Planning A, , vol. 9(10), pages 1143-1156, October.
    2. Wolf-Dieter Eberwein & Gisela Hübner-Dick & Wolfgang Jagodzinski & Hans Rattinger & Erich Weede, 1979. "External and Internal Conflict Behavior Among Nations, 1966-1967," Journal of Conflict Resolution, Peace Science Society (International), vol. 23(4), pages 715-742, December.
    3. Patil, Vivek H. & Singh, Surendra N. & Mishra, Sanjay & Todd Donavan, D., 2008. "Efficient theory development and factor retention criteria: Abandon the `eigenvalue greater than one' criterion," Journal of Business Research, Elsevier, vol. 61(2), pages 162-170, February.
    4. Ferguson, Graham & Megehee, Carol M. & Woodside, Arch G., 2018. "Applying asymmetric, case-based, forecasting modeling in service research: Cultures’ consequences on customers’ service gratuities," Australasian marketing journal, Elsevier, vol. 26(4), pages 369-381.
    5. Robert MacCallum, 1983. "A comparison of factor analysis programs in SPSS, BMDP, and SAS," Psychometrika, Springer;The Psychometric Society, vol. 48(2), pages 223-231, June.
    6. A. Oumlil & Joseph Balloun, 1994. "Some simple structure significance tests for exploratory component analysis with market survey data," Quality & Quantity: International Journal of Methodology, Springer, vol. 28(4), pages 371-381, November.
    7. Ferguson, Graham & Megehee, Carol M. & Woodside, Arch G., 2017. "Culture, religiosity, and economic configural models explaining tipping-behavior prevalence across nations," Tourism Management, Elsevier, vol. 62(C), pages 218-233.
    8. James Bennett, 1978. "Imperialism on a swallowtail: Applications of catastrophe theory to international relations," Quality & Quantity: International Journal of Methodology, Springer, vol. 12(1), pages 1-17, March.
    9. Charles Sherman, 1972. "Nonmetric multidimensional scaling: A monte carlo study of the basic parameters," Psychometrika, Springer;The Psychometric Society, vol. 37(3), pages 323-355, September.
    10. Agyeman, Stephen & Cheng, Lin, 2020. "Analysis of barriers to perceived service quality in Ghana: Students’ perspectives on bus mobility attributes," Transport Policy, Elsevier, vol. 99(C), pages 63-85.

    More about this item

    Keywords

    factor analysis;

    JEL classification:

    • A - General Economics and Teaching

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