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njit-etd2003-081 - New Jersey Institute of Technology

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108<br />

the principal components are not intercorrelated. Thus instead <strong>of</strong> analyzing a large<br />

number <strong>of</strong> the original variables with complex interrelationships, the investigator can<br />

analyze a small number <strong>of</strong> uncorrelated principal components.<br />

The selected principal components may also be used to test for their normality.<br />

If the principal components are not normally distributed, then neither are the original<br />

variables. Another use <strong>of</strong> the principal components is to search for outliers. A<br />

histogram <strong>of</strong> each <strong>of</strong> the principal components can identify those individuals with very<br />

large or very small values; these values are candidates for outliers or blunders.<br />

In regression analysis it is sometimes useful to obtain the first few principal<br />

components corresponding to the X variables and then perform the regression on the<br />

selected components. This tactic is useful for overcoming the problem <strong>of</strong><br />

multicollinearity since the principal components are uncorrelated [55].<br />

Principal component analysis is considered to be an exploratory technique that<br />

may be useful in gaining a better understanding <strong>of</strong> the interrelationships among the<br />

variables. The original application <strong>of</strong> principal component analysis was in the field <strong>of</strong><br />

educational testing. Hotelling [56] developed this technique and showed that there are<br />

two major components to responses on entry-examination tests: verbal and quantitative<br />

ability. Principal components analysis is also used extensively in psychological<br />

applications in an attempt to discover underlying structure. In addition, principal<br />

components analysis has been used in biological and medical applications [57] [58].

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