- Date: 15th century
- 1 : one who acts or transacts business for another: as a : broker
- 2 a (1) : one that actively contributes to the production of a result : ingredient <price wasn't a factor in the decision> (2) : a substance that functions in or promotes the function of a particular physiological process or bodily system
- 3 : gene
- 4 a : any of the numbers or symbols in mathematics that when multiplied together form a product; also : a number or symbol that divides another number or symbol
- b : a quantity by which a given quantity is multiplied or divided in order to indicate a difference in measurement <costs increased by a factor of 10>
Factor analysis is a statistical method used to describe variability among observed variables in terms of a potentially lower number of unobserved variables called factors. In other words, it is possible, for example, that two or three observed variables together represent another, unobserved variable, and factor analysis searches for these possible combinations. The observed variables are modeled as linear combinations of the potential factors, plus "error" terms. The information gained about the interdependencies between observed variables can be used later to reduce the set of variables in a dataset. Factor analysis originated in psychometrics, and is used in behavioral sciences, social sciences, marketing, product management, operations research, and other applied sciences that deal with large quantities of data.