Hello, everyone. I am computing an index using Principal Component Analysis. After running the PCA command on Stata, I observed first two components being greater than one, meaning first two components explain most of the variation. I have generated the two scores using the predict option This brings me to my question- how to use the first two components to create the index? Should I take an average of the scores? Note that the first components explains 50% and second almost 30%, so just an average could be a wrong approach if I am not wrong. Can you guide me to the right approach Thanks in advance.
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