The Use of Factor Analysis in the Construction of Linear Composites in Social Research

This paper discusses the uses of factor analysis in the development of composite indices in social research. A distinction is drawn between "factor-based" scores and factor scores, and some comparisons are made between the two general approaches. After reviewing the methods of factor score estimation in some detail, an empirical example is presented which casts doubt on the efficacy of factor score estimation procedures, and favors the continued use of factor-based scores by social researchers.