aes Ci Ra eee Lee eae eae ee an mes Psat)Overview of Multivariate Methods LEARNING OBJECTIVES Upon completing this chapter, you should be able to do the following: ™ Explain what multivariate analysis is and when its application is appropriate. ™ Discuss the nature of measurement scales and their relationship to multivariate techniques. ™ Understand the nature of measurement error and its impact on multivariate analysis. ™ Determine which multivariate technique is appropriate for a specific research problem. ™ Define the specific techniques included in multivariate analysis. ™ Discuss the guidelines for application and interpretation of multivariate analyses. ™ Understand the six-step approach to multivariate model building. CHAPTER PREVIEW ‘This chapter presents a simplified overview of multivariate analysis. It stresses that multivariate analysis methods will increasingly influence not only the analytical aspects of research but also the design and approach to data collection for decision making and problem solving. Although multivariate tech- niques share many characteristics with their univariate and bivariate counterparts, several key differ- ences arise in the transition to a multivariate analysis. To illustrate this transition, this chapter presents a Classification of multivariate techniques. It then provides general guidelines for the application of these techniques as well as a structured approach to the formulation, estimation, and interpretation of multivariate results. The chapter concludes with a discussion of the databases utilized throughout the text to illustrate application of the techniques. KEY TERMS Before starting the chapter, review the key terms to develop an understanding of the concepts and ter- minology used. Throughout the chapter, the key terms appear in boldface. Other points of emphasis in the chapter are italicized. Also, cross-references within the key terms appear in italics. Alpha (a) See Type I error. Beta (B) See Type I error. Bivariate partial correlation Simple (two-variable) correlation between two sets of residuals (unexplained variances) that remain after the association of other independent variables is removed. From Chapter 1 of Multivariate Data Analysis, 7le. Joseph F. Hair, Jr, William C. Black, Barry J. Babin, Rolph E. Anderson. Copyright © 2010 by Pearson Prentice Hall. All rights reserved.Overview of Multivariate Methods Bootstrapping An approach to validating a multivariate model by drawing a large number of sub- samples and estimating models for each subsample. Estimates from all the subsamples are then com- bined, providing not only the “best” estimated coefficients (e.g., means of each estimated coefficient across all the subsample models), but their expected variability and thus their likelihood of differing from zero; that is, are the estimated coefficients statistically different from zero or not? This approach does not rely on statistical assumptions about the population to assess statistical significance, but instead makes its nt based solely on the sample data. Composite measure See summated scales. Dependence technique _ Classification of statistical techniques distinguished by having a variable or set of variables identified as the dependent variable(s) and the remaining variables as independent. The objective is prediction of the dependent variable(s) by the independent variable(s), An example is regression analysis. Dependent variable Presumed effect of, or response to, a change in the independent variable(s). Dummy variable Nonmetrically measured variable transformed into a metric variable by assign- ing a 1 ora 0 to a subject, depending on whether it possesses a particular characteristic. Effect size Estimate of the degree to which the phenomenon being studied (¢.g., correlation or difference in means) exists in the population, Independent variable Presumed cause of any change in the dependent variable. Indicator Single variable used in conjunction with one or more other variables to form a composite measure. Interdependence technique Classification of statistical techniques in which the variables are not divided into dependent and independent sets; rather, all variables are analyzed as a single set (€.g., factor analysis). Measurement error _ Inaccuracies of measuring the “true” variable values due to the fallibility of the measurement instrument (i.¢., inappropriate response scales), data entry errors, or respondent errors. Metric data _ Also called quantitative data, interval data, or ratio data, these measurements iden- tify or describe subjects (or objects) not only on the possession of an attribute but also by the amount or degree to which the subject may be characterized by the attribute. For example, a person’s age and weight are metric data. Multicollinearity Extent to which a variable can be explained by the other variables in the analy- sis. As multicollinearity increases, it complicates the interpretation of the variate because it is more difficult to ascertain the effect of any single variable, owing to their interrelationships. Multivariate analysis Analysis of multiple variables in a single relationship or set of relationships. Multivariate measurement Use of two or more variables as indicators of a single composite measure. For example, a personality test may provide the answers to a series of individual ques- tions (indicators), which are then combined to form a single score (summated scale) representing the personality trait. Nonmetric data _ Also called qualitative data, these are attributes, characteristics, or categorical properties that identify or describe a subject or object. They differ from metric data by indicating the presence of an attribute, but not the amount. Examples are occupation (physician, attorney, professor) or buyer status (buyer, nonbuyer). Also called nominal data or ordinal data. Power Probability of correctly rejecting the null hypothesis when it is false; that is, correctly finding a hypothesized relationship when it exists. Determined as a function of (1) the statistical significance level set by the researcher for a Type I error (), (2) the sample size used in the analysis, and (3) the effect size being examined. Practical significance Means of assessing multivariate analysis results based on their substantive findings rather than their statistical significance. Whereas statistical significance determines whether the result is attributable to chance, practical significance assesses whether the result is useful (i.e., substantial enough to warrant action) in achieving the research objectives. Reliability Extent to which a variable or set of variables is consistent in what it is intended to measure. If multiple measurements are taken, the reliable measures will all be consistent in their