Factor structure in groups selected on observed scores

A new method is proposed for estimating factor means and factor covariances in a group of individuals selected on their observed scores. The selection variable is, for example, the total score on an admissions test. Given a factor model for the test items based on the group of test takers, we may be interested in the factor structure for those in the top quartile. The differences in factor means and covariances between this selected group and the full group gives useful information both on successful test performance and on test validity. The new method draws on the classic Pearson-Lawley selection formulas. It avoids the fallacy of factor analysis on the selected group, which would lead to incorrect estimates. The new method is applied to a simple factor structure model for the GMAT test. Although the majority of the GMAT items test verbal skills, it is found that a quantitative factor shows the greatest change in moving from average to top quartile test takers.