Reflective Vs Formative Indicators: The Concept and Differences

The relationship between the indicators and the underlying construct can be formative or reflective. Latent variables are assessed by observable measures (indicators). The measurement model describes the relationship between these manifest indicators and the latent construct.

Measurement models can be reflective or formative in nature.

In reflective models, the indicators are affected by the latent variable, whereas in formative models the indicators define the latent variable. Reflective Indicators are interchangeable since the concept is reflected in the different indicators, sharing a common theme.

Formative indicators are not interchangeable because each indicator contributes a specific meaning to the latent variable. In the case of formative models, it is the other way around; a change in the indicators results in a change in the construct under study.

In a reflective model, the latent construct exists (in an absolute sense) independent of the measures. Since the indicators are used interchangeably, even with the deletion of the one of the indicators, the latent variable will still exist. 

Practically all scales in business and related methodological texts on scale development use a reflective approach to measurement.

In contrast, in a formative model, the latent construct is dependent upon a constructivist, operationalist or instrumentalist interpretation by the scholar.

For example, the human development index (HDI) does not exist as an independent entity. Rather, it is a composite measure of human development that includes: health, education and income (UNDP, 2006). Any change in one or more of these components is likely to cause a change in a country’s HDI score. In contrast to the reflective model, few examples of formative models are seen in the business literature.

A reflective measurement theory is based on the idea that latent constructs cause the measured variables and the error results in an inability to fully explain these measures.

For example, Customer Commitment is believed to cause specific measured indicators like willingness to obtain brand X, telling friends about purchasing brand X, and continuing to buy brand X at higher price. Here Commitment can be expressed through different ways. Even if one does not tell friends and shows willingness to buy brand X at a higher price, this is still termed Commitment.

In contrast, a formative measurement theory is modeled based on the assumption that measured variables cause the construct. The error in the formative measurement models is an inability to fulling explain the construct. This means that the indicator list must be comprehensive.

 For example, the social class index, SCI is a composite of one’s educational level, occupational prestige, and income. SCI does not cause these indicators as in reflective case, but these indicators cause the SCI. In case we remove Income as indicator, we cannot call it SCI.