Chapter 10

Moderation, Mediation
Analysis

Research Methods
Dr. Asif Mahmood
Institute of Business & Management,
UET Lahore
 Moderation: Interactions in Regression
(The conceptual model)
The combined effect of two variables on
another is known conceptually as
moderation, and in statistical terms as
an interaction effect
• Imagine a scientist wanted to look at the
relationship between playing violent
video games and aggression. She
gathered data from 442 youths. She
measured their aggressive behaviour
(Aggression—Outcome), callous
unemotional traits* (CaUnTs—
Moderator), and the number of hours
per week they play video games
(Vid_Games—Predictor).

Example—A categorical moderator (callous traits)

(Categorical—callous or not callous)
*Such as lack of guilt, lack of empathy, and callous use of
 The Statistical Model

• We predict the outcome from

– the predictor variable
– the proposed moderator
– the interaction of the two
• It is the interaction effect that tells us whether moderation has occurred
• General Multiple Regression
Yi =(b0 + b1X1i + b2X2i + … + bnXni) + εi
Our Example: Aggressioni = (b0 + b1 Gamingi + b2 Callousi) + εi
• To test for moderation
Yi =(b0 + b1Ai + b2 Bi + b3 A Bi) + εi
Aggressioni = (b0 + b1 Gamingi + b2 Callousi +b3 Interactioni) + εi
 Exercise

Centering of Variables
• Choose
• Select Vid_Games and CaUnTs Variable(s)  select mean
• Select
• Complete dialog box as to obtain a variable
that is centered around mean value
(the mean of new variable is zero)
• Repeat for the second variable
Creating Interaction Term
• Select
• Complete the dialog box as
Regression Analysis
• Select 
• Complete the dialog box as shown
• There is a significant moderation
effect as shown by the significant
interaction between hours spent
gaming and callous unemotional
traits
 The Statistical Model
• Historically, this model was tested
through a series of regression
analyses, which reflect the four
conditions necessary to demonstrate
mediation (Baron & Kenny, 1986).
• Baron and Kenny suggested in their
seminal paper that mediation is tested
through three regression models (see
figure) if:
1. A regression significantly predicting the outcome from the predictor variable.
(Total Effect??  regression coefficient c).
2. A regression significantly predicting the mediator from the predictor variable.
(regression coefficient a).
3. A regression significantly predicting the outcome from mediator while controlling
for the independent variable. (the regression coefficient for the mediator, b and
regression coefficient for the predictor, c’ (Direct Effect ).
• Moreover, the predictor variable must predict the outcome variable less strongly
in model 3 than in model 1.
Perfect mediation occurs when c’ is zero or insignificant
Indirect Effect = Total Effect – Direct Effect
(Judd and Kenny, 1981)
Indirect Effect = axb, (Sobel, 1982)
• Total Effect = c, in case of simple mediation models, while in complex
models, Total Effect<c due to other factors involved so it is necessary
to calculate effects together…
• The significance of this effect can be assessed using the Sobel test
(Sobel, 1982).
• If the Sobel test is significant it means that the predictor significantly
affects the outcome variable via the mediator (Indirect Effect ).
• Large sample sizes are required in order to have sufficient power to
detect significant effects. This is because the key assumption of
Sobel’s test is the assumption of normality
 Exercise
(Mediation Analysis by Baron and Kenny Approach)
Example (See diagram)
• The researchers measured Social Media
Communications on a scale from 0 (low)
to 8 (high), It was log-transformed
(LnSM_Comm) due to positive skewness.
They also measured Mistrust on a scale
from 1 (low) to 5 (high). Purchase
Intention was measured (0 to 2).

• Is there evidence of mediation?

Data File: Communication.sav
 Dialog box for model 1 Output for model 1

Dialog box for model 2

Select also confidence

intervals

Output for model 2

• Output for model 1 that Social Media Communications significantly predict Mistrust,
b = 0.59, 95% CI [0.19, 0.98], t = 2.93, p = .004. As communications increase,
purchase intention increases as well
• Output for model 2 shows that Social Media Communications significantly predict
Mistrust, b = -0.47, 95% CI [-0.89, -0.05], t = -2.21, p=.028. As communications
increase, purchase intention declines.
 Dialog box for model 3
• Output for model 3 shows that Mistrust
significantly predicts Purchase Intention, b =
-0.27, 95% CI [-0.39, -0.16], t = -4.61, p <
.001. As Mistrust increases, Purchase
Intention declines.
• Moreover, the relationship between Social
Media Communications and Purchase
Intention is stronger in model 1, b = 0.59,
than in model 3, b = 0.46.
• As such, the four conditions of mediation
have been met. Output for model 3
Indirect Effect = Total Effect – Direct Effect
= 0.587— 0.457 = 0.13
But is mediation significant?
• Online Sobel Test…
• http://quantpsy.org/sobel/sobel.htm
• That shows significant Mediation
Submissions
• Your Final Project
• Reviewed Report of your peer’s project in the
required format