Charles Spearman advanced Two-Factor Theory of intelligence in 1927. It was a theory of trait organization based on the statistical analysis of test scores. Spearman pointed out that all intellectual activities have a single common factor called the general factor or "g" factor. Again he advanced a number of specific or "s" factors. Each of the s-factors refers to a specific single activity. He explored statistically the interrelations among scores obtained by many persons on various tests. Positive correlation between any two mental functions was attributed to "g" factor. But the specific factors have low correlations among them.
Spearman's model implies that the objectives of psychological testing should be to measure the amount of each individual's ‘g'. The g-factor runs through all abilities, and forms the basis for prediction of the individual's performance. It would be futile to measure specific factor, as each operates in only a single activity.
Tests 1 & 2 are correlated with each other, which is shown by the over lapping shadow area. The shaded area represents the ‘g’ factor, while the area shown separately for each test represent‘s’ factors. Spearman advocated that the 'g' factor provides a correct picture of intelligence. His model of two-factor theory paved the way for application of factor analysis in psychology. Later, factor analysis was used for discovering cluster of traits, which produced amazing multiple factors.