An Entropy-Based Approach for Measuring Factor Contributions in Factor Analysis Models

In factor analysis, factor contributions of latent variables are assessed conventionally by the sums of the squared factor loadings related to the variables. First, the present paper considers issues in the conventional method. Second, an alternative entropy-based approach for measuring factor contributions is proposed. The method measures the contribution of the common factor vector to the manifest variable vector and decomposes it into contributions of factors. A numerical example is also provided to demonstrate the present approach.