13  Introduction

There is an important distinction between multivariable and multivariate models.

• multivariable : Multiple predictor variables (\(\mathbf{x}\)).
• multivariate: Multiple response variables (\(\mathbf{Y}\)).

Often analysts will misuse multivariate when they really mean multivariable.

Multivariate techniques are

• Primarily used as an exploratory technique
• Restructure interrelated variables
• Simplify description
• Reduce dimensionality
• Avoid multicollinearity problems in regression

We will discuss two different, but related techniques: Principal Component Analysis and Factor Analysis.