The purpose of multivariate analysis in index construction is to discover the simultaneous interaction of the items to determine whether they are all appropriate for inclusion in the same index.

Question

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Multivariate analysis is used to identify patterns of covariance and correlation among variables in order to determine whether they are suitable for combined inclusion in an index. By examining the relationships among items, this technique can help to ensure that the items in an index are measuring the same underlying construct or phenomenon.

The Purpose of Multivariate Analysis in Index Construction Is to Discover