Toward a Causal Interpretation of the Common Factor Model

Psychological constructs such as personality dimensions or cognitive traits are typically unobserved and are therefore measured by observing so-called indicators of the latent construct (e.g., responses to questionnaire items or observed behavior). The Common Factor Model (CFM) models the relations between the observed indicators and the latent variable. In this article we argue in favor of interpreting the CFM as a causal model rather than merely a statistical model, in which common factors are only descriptions of the indicators. When there is sufficient reason to hypothesize that the underlying causal structure of the data is a common cause structure, a causal interpretation of the CFM has several benefits over a merely statistical interpretation of the model. We argue that (1) a causal interpretation conforms with most research questions in which the goal is to explain the correlations between indicators rather than merely summarizing them; (2) a causal interpretation of the factor model legitimizes the focus on shared, rather than unique variance of the indicators; and (3) a causal interpretation of the factor model legitimizes the assumption of local independence.