While working on our last assignment i.e. Analysis of the behaviour of cellular phone users and identify behaviour signatures based on their calling patterns by using Factor Analysis. We came across a term called ‘Scree Plots’ .
The Cattell scree test plots the components as the X axis and the corresponding eigenvalues as the Y-axis. As one moves to the right, toward later components, the eigenvalues drop. When the drop ceases and the curve makes an elbow toward less steep decline, Cattell's scree test says to drop all further components after the one starting the elbow.
We drilled in further to understand how Scree plot is plotted and what are the different factors considered for plotting.
In other words It helped us understand how many factors should be retained for analysis? There is no clear answer but a couple of rules of thumb.
One rule is to consider only those with eigenvalues over 1.
Another rule of thumb is to plot all the eigenvalues in their decreasing order. The plot looks like the side of a mountain, and "scree" refers to the debris fallen from a mountain and lying at its base.
So the scree test proposes to stop analysis at the point the mountain ends and the debris (error) begins.
In this instance, that point coincides with the eigenvalue criterion.
Author: Navdeep Kumar
Roll No : 13150
Marketing group 5