Average Variance Extracted and Composite Reliability: Reliability Coefficients

Abstract

The average variance extracted (AVE) and the composite reliability coefficients (CR) are related to the quality of a measure. Meanwhile, in order to avoid misconceptions, it is required to properly comprehend the equations of the AVE and CR, as well as their relation with the definition of validity and reliability. In this paper, we illustrate, using simulated one-factor models, how the number of items and the homogeneity of factor loadings might influence the AVE and CR results. In so doing, we show that the use of fixed AVE and CR cutoffs is problematic. Moreover, we present reasons endorsing the use of the AVE as a reliability coefficient, instead of a convergent validity index.