While creating a wealth index using the household asset (dichotomized ), Can we take the second principal component (comp 2) if it has more relative positive eigenvectors (For example: as shown in the attached picture)? If yes, which is the best reference to quote. Thank you
Not sure why you want to look at the positive eigen vectors. Did you understand the comp1 why they are positive or negative and which variables contribute to. All positive values are for animal assets and negative are for material assets.
Second, look at the cumulative variation explained by first two components.
A good practice is to consider from first principal component till the desired component and not directly pick choosing the desired component.
Mohd H thank you very much for the answer. It is great to help. In some point, I get practical confusion. In above-attached file, If we see in PC1 variables such as motorbike, refrigerator, vehicle, etc. have a negative magnitude. So, in the case of counting wealth, it will lead to the opposite direction (i.e those who have a vehicle, refrigerator, motorbike etc. will contribute to poor wealth). Therefore from the practical point of view, I thought PC2 will be good. :)
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