I would add another criterion, which is qualitative, and therefore not
reducible to a quantitative rule:

3. Use your professional judgement.  Does the pattern of factor loadings
make sense?  For example, if the variables are item scores on a
multi-dimensional instrument, can you see a meaningful connection among
the items which load highly on a particular factor?

The "eigen-value greater than 1" criterion is very arbitrary, and in
interpreting a factor analysis matrix of item scores, I often discard
numerous factors which meet the eigen-value criterion but fail to make
any sense when I apply my judgement to the pattern of loadings.

I can reduce all this to a single maxim: Factor analysis is an art as
well as a science.

Paul Gardner


Alex Yu wrote:
> 
> There are several rules. The most popular two are:
> 
> 1. Kasier criterion: retain the factor when eigenvalue is larger than 1
> 2. Scree plot: Basically, it is eyeballing. Plot the number of factors
> and the eigenvalue and see where the sharp turn is.
> 
> Hope it helps.

> Chong-ho (Alex) Yu, Ph.D., CNE, MCSE

> 
> On Tue, 2 May 2000 [EMAIL PROTECTED] wrote:
> 
> > Would any of you know a rule of thumb for selecting the proper (of
> > optimal) number of factors to be extracted from a factor analysis.
> > Also, how many variables can there be in such factor (is two variable
> > in one factor not enough?).
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