Factor rotation with non-negativity constraints

Stephen Pudney

No CWP02/11, CeMMAP working papers from Centre for Microdata Methods and Practice, Institute for Fiscal Studies

Abstract:

Factor rotation is widely used to interpret the estimated factor loadings from latent variable models. Rotation methods embody a priori concepts of 'complexity' of factor structures, which they seek to minimise. Surprisingly, it is rare for researchers to exploit one of the most common and powerful sources of a priori information: non-negativity of factor loadings. This paper develops a method of incorporating sign restrictions in factor rotation, exploiting a recently-developed test for multiple inequality constraints. An application to the measurement of disability demonstrates the feasibility of the method and the power of non-negativity restrictions.

Keywords: econometrics (search for similar items in EconPapers)
Date: 2011-01-26
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Related works:
Working Paper: Factor rotation with non-negativity constraints (2011)
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