, Volume 64, Issue 2, pp 113-128

On the relationship between the higher-order factor model and the hierarchical factor model

Rent the article at a discount

Rent now

* Final gross prices may vary according to local VAT.

Get Access

Abstract

The relationship between the higher-order factor model and the hierarchical factor model is explored formally. We show that the Schmid-Leiman transformation produces constrained hierarchical factor solutions. Using a generalized Schmid-Leiman transformation and its inverse, we show that for any unconstrained hierarchical factor model there is an equivalent higher-order factor model with direct effects (loadings) on the manifest variables from the higher-order factors. Therefore, the class of higher-order factor models (without direct effects of higher-order factors) is nested within the class of unconstrained hierarchical factor models. In light of these formal results, we discuss some implications for testing the higher-order factor model and the issue of general factor. An interesting aspect concerning the efficient fitting of the higher-order factor model with direct effects is noted.

The authors would like to thank the reviewers for their useful comments for the revision of the manuscript. Requests for reprints should be sent to Yiu-Fai Yung, R52, Multivariate & Num. R&D, SAS Campus Drive, SAS Institute, Inc. Cary NC 27513.