st:compute wealth index score with PCA

[Wei Yee <weiyee20@gmail.com>]

Hi all,

I am trying to compute a wealth index score and then categorized them
into quintiles. I have never done PCA or factor analysis before and
have spent the past few days reading up but I think I am still a
little confused. I really hope you guys will be able to shed some
light.

I started with converting the questions/variables (eg. if they own a
tv, radio, mobile, flooring materials) to binary.Then I use the -pca-
command,
"pca naturalfloor rudimentaryfloor finishedfloor nonbiomass biomass
radio tv mobile nonmobile watch bike motorbike cart car motorboat",
followed by "predict score1".
Then, I use "xtile score1_cat = score1, nq(5)" to  categorized into quintiles.

My questions are:
1. Is this the correct method to obtain the quintiles representing
different categories of wealth?
2. How is this different from using the command : -factor (var1, var2,
..), pcf ?

Any suggestions or feedbacks will be greatly appreciated. Thank you so
much in advance.

Best Regards,
Wei Yee.
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