An Objective Counterpart to the Visual Scree Test for Factor Analysis: The Standard Error Scree

Many methods have been suggested for determining the number of factors in factor analysis solutions, most of them trying to match visual solutions. Presented here is a linear regression approach providing objectivity while producing the same results as the visual scree test. The standard error scree is based on the standard error of estimate for a set of points in the plot of eigenvalues. The number of factors to retain corresponds to the point where the standard error exceeds 1/m, where m is the numbers of variables in the analysis. Experience with the method to date indicates that the results are consistent with visual solutions.