Determine the number of factors

There is no definitive, simple way to determine the number of factors. This is a subjective
decision by the researcher, but the researcher should be guided by several considerations:
1. Theory: e.g. How many factors were expected? For new factors, were they expected?
Do the extracted factors make theoretical sense?
2. Kaiser's criterion: Eigen-values over 1; but this is arbitrary. Use judgement too about
how many factors are going to be extracted for the final model.
3. Screen-plot: Plots eigen-values. Look for a notable drop; the rest is 'screen'. Extract
the number of factors that form the 'cliff'. Again, use judgement about the meaning of
the factors for final decisions.
4. Interpretability: Are all factors interpretable? (Especially the last one?) In other
words, can you reasonably name and describe the items as indicative of an underlying
factor?
5. Have you tried several different models, with different numbers of factors? Before
deciding on the final number of factors makes sure to look at solutions for, say, 2, 3, 4,
5, 6 and 7 factors.
6. Have you eliminated items which don't seem to belong? (This can change the
structure/number of factors)? After you remove items which don't seem to belong,
then re-check whether you still have a clear factor structure. It may be that a different
number of factors (probably one or two fewer) are now more appropriate.
7. Are the factor correlations not too high (e.g., not over ~.7 otherwise the factors
may be too similar (and redundant)?)
8. Check the factor structure across sub-samples (e.g., is the fact structure consistent
for males and females?)
Name and describe the factors
1. Give each extracted factor a name
1. Read through the items with primary loadings on the factor what underlying
factor do they represent?
2. If unsure, emphasize the top loading items in naming the factor
2. Describe each factor
1. Develop a one sentence definition or description of each factor
Criteria for selecting items
In general, aim for a simple factor structure (unless you have a particular reason why you
think a complex structure would be preferable).
In a simple factor structure each item has a relatively strong loading on one factor (e.g., > .5)
and relatively small loadings on other factors (e.g., < .3).

Consider the following criteria to help decide whether to include or remove each variable.
Remember that these are rules of thumb only avoid over-reliance on any single indicator.
The overarching goal is to include items which contribute to a meaningful measure of an
underlying factor and to remove items that weaken measurement of the underlying factor(s).
In making these decisions, consider:
1. Communality (indicates the variance in each item explained by the extracted factors;
ideally, above .5)
2. Primary (target) factor loading (indicates how strongly each item loads on each
factor; should generally be above .5, preferably above .6)
3. Item cross-loadings (indicates how strongly each item loads on each other factor;
should be a gap of at least ~.2 between primary and cross-loadings), with crossloadings above .3 being worrisome)
4. Meaningful and useful membership to a factor (read over each item to check
whether it makes a meaningful and useful (non-redundant) contribution to an
identifiable factor (face validity)
5. Reliability (check internal consistency of each factor using Cronbach's alpha and
check the "Alpha if item removed" option to determine whether removal of any
additional items would improve reliability)
6. See also: How do I eliminate items? (lecture notes)