EconStatsCraft › Scale reliability (Cronbach’s alpha)

Scale reliability (Cronbach’s alpha)

Whether a battery of survey questions hangs together as one measure. The first thing to run on any multi-item scale, and the number every marketing dissertation is asked for before the analysis that uses the scale.

What it needs

The intuition

Several survey items are meant to measure one underlying thing. Reliability asks whether they behave that way - whether people who score high on one score high on the others. Cronbach's alpha is the standard number, it is reported everywhere, and it is widely misunderstood: it is not a measure of unidimensionality, and it rises with the number of items whether or not those items are any good.

When to use it

Before any analysis that averages or sums several items into a construct - service quality, brand image, satisfaction. This is the number a marketing dissertation is asked for first, and the check that stops a meaningless composite being used as if it were a measurement.

Where the estimator comes from

For k items with total score X=\sum_j X_j, \alpha=\frac{k}{k-1}\left(1-\frac{\sum_j \sigma^2_{X_j}}{\sigma^2_X}\right). The bracket compares the sum of item variances against the variance of the total: if items are uncorrelated the total variance is just the sum and \alpha=0; if they are perfectly correlated the total variance is k^2 times larger and \alpha\to1. Written in terms of the average inter-item correlation \bar{r}, the Spearman-Brown form makes the dependence on length explicit: \alpha=\frac{k\bar{r}}{1+(k-1)\bar{r}}, which is increasing in k for any fixed \bar{r} - so length alone raises alpha.

The model

\alpha = \frac{k}{k-1}\left(1 - \frac{\sum_i \sigma^2_i}{\sigma^2_{\text{total}}}\right)

What it assumes

Statistical properties

How to read the output

A worked reading

Four service-quality items on 600 respondents give alpha = 0.8812, comfortably above the conventional 0.7. The item analysis is what makes that number trustworthy rather than merely large: every corrected item-total correlation sits between 0.7196 and 0.7667, so all four items are measuring the same thing to a similar degree, and "alpha if deleted" is LOWER than 0.8812 for every one of them - dropping any item would make the scale worse, which is the pattern a coherent scale shows. Now the caution that alpha alone cannot give you. Alpha rises mechanically with the number of items: the same four items repeated to make twenty would push it well past 0.9 without measuring anything new. A high alpha on a long questionnaire tells you the questionnaire is long, and it is only evidence of reliability when read beside the item-total correlations, as here.

Symptom → diagnosis → what to do

If you see thisIt meansDo this
Alpha near zero or negativeA reverse-coded item not reversedCheck item-total correlations for a negative
Alpha rising sharply when an item is droppedThat item does not belongInspect its content, not just the statistic
Alpha above 0.95Redundant itemsShorten the scale; nothing is lost
High alpha but two factorsAlpha does not test dimensionalityRun factor analysis
Alpha low with few itemsExpected. Length drives itJudge by average inter-item correlation instead
Alpha differing from omegaLoadings are unequalReport omega; alpha is a lower bound

Common mistakes

Where to read this properly

See also

Factor analysis, which answers the dimensionality question alpha cannot. Drivers analysis, for what the resulting scale predicts.

Related Marketing research

Conjoint analysis · MaxDiff (best–worst scaling) · TURF - reach of a product line · Price sensitivity (Van Westendorp) · Market basket analysis · Perceptual map · Key driver analysis

All analyses

Charts

Line chart · Area chart · Bar chart · Stacked bar · Scatter plot · Bubble chart · Histogram · Box plot · Pie chart · Heat map · Rebased to 100 · Lorenz curve and Gini

Maps

World map · Bivariate map · Flow map · India - state map · India - district map

Explore

Descriptive statistics · Summary by group · Two-way table · Classical statistical tests

Regression

Multiple regression (OLS) · Logit / Probit · Tobit (censored) · Truncated regression · Multinomial logit · Ordered logit / probit · Quantile regression · Poisson / Negative binomial

Time series - one series

Time-varying coefficients (Kalman) · Unit root tests · Correlogram (ACF / PACF) · ARIMA / SARIMA · Rolling-origin cross-validation · Theta method · Unobserved components · STL forecasting · Forecast combination · Markov regime switching · Change frequency (resample) · ARCH / GARCH volatility · Decompose & filter · Spectral analysis · Exponential smoothing · Forecast accuracy

Time series - several series

Yield curve (Nelson–Siegel / Svensson) · Dynamic factor model · Dynamic regression (ARIMAX) · Structural VAR · VAR · Granger causality · Cointegration · VECM · ARDL & bounds test

Panel data

Panel regression · Panel cointegration tests · Heterogeneous panel: Mean Group & PMG · Gravity model of trade · Dynamic panel GMM · Panel diagnostics · Panel unit-root tests

Multivariate statistics

Principal components (PCA) · Factor analysis · Cluster analysis

Marketing research

Conjoint analysis · MaxDiff (best–worst scaling) · TURF - reach of a product line · Price sensitivity (Van Westendorp) · Market basket analysis · Perceptual map · Scale reliability (Cronbach’s alpha) · Key driver analysis

Causal

Spatial autocorrelation · Spatial regression · Heckman selection · Instrumental variables (2SLS) · Difference-in-differences · Staggered difference-in-differences · Regression discontinuity · Matching & weighting · Oaxaca–Blinder decomposition

Finance & risk

Black–Scholes option pricing · Bond price, duration & convexity · Merton distance to default · EMI / home loan planner · CAPM / beta estimation · Multi-factor model · Portfolio optimization · Value at Risk & Expected Shortfall · Performance & drawdown · Time value of money & NPV/IRR · Equity valuation (DDM, FCF, residual income) · Cost of capital (WACC) · Binomial option pricing · Option strategies (payoff & profit) · Forwards, futures & swaps · Credit risk & Basel capital · Extreme value theory (tail risk)

Actuarial

Life table · Life annuity · Life insurance pricing · Chain ladder reserving · Buhlmann credibility · Survival analysis · Mortality graduation · Aggregate loss model · Ruin probability · Multi-state Markov model · Loss severity fitting

Tests & breaks

Monte Carlo experiment · F-test, Wald & Chow · Structural breaks & stability

Machine learning

Regression vs machine learning · Ridge / Lasso / Elastic Net · Random forest · Gradient boosting

Open the workspace →

Starting engine…

EconStatsCraft rigorous, plain-spoken econometrics

Econometrics that explains itself.

Regression, panel data, time series and the whole battery of tests. Every result is followed by a verdict you can defend.

Load a dataset to see it here.