### 2.2 Construction of Indices

An important question in social survey research is how to measure latent
variables**. **Latent variables are those variables, which cannot be observed
or measured directly. Some examples are – job satisfaction, leadership
quality**, **work environment in a** **company, etc. Such variables are
measured through certain indicators (which are called indicator items, or
simply items. Indicator items are selected on the basis of theoretical grounds,
prior research evidence, and if these are not available, or are not well
founded, through factor analysis. The indicator items measuring a latent
variable should satisfy at least the following criteria;

- The items measuring a latent variable should be highly
correlated among themselves.
- The items measuring a latent variable should not be correlated
with the items of another latent variable.

These conditions are necessary, since all the items of a latent variable are
expected to measure uniquely that latent variable and no other latent variable.

After having selected the indicator items, the next step in data analysis is
to construct a single measure – score or index of the selected items.

IDAMS offers two possibilities for construction of
indices.

- Summated ratings
- POSCOR scores