The eigenvalue is a measure of how much of the variance of theobserved variables a factor explains. Any factor with an eigenvalue≥1 explains more variance than a single observed variable, so ifthe factor for socioeconomic status had an eigenvalue of 2.3 itwould explain as much variance as 2.3 of the three variables. Thisfactor, which captures most of the variance in those threevariables, could then be used in another analysis. The factors thatexplain the least amount of variance are generally discarded. Howdo we determine how many factors are useful to retain?
