Intermediate variables explained

Poverty & Inequality01 Jan 2007The Broker

Inequality may have a direct influence on access to power, but more often it has an impact through intermediate variables. These are variables (Y) through which another variable (X) exerts influence on yet another variable (Z). Take, for example, the relationship between high temperatures and headache. A high temperature may give you a headache (direct relationship), but it is more likely is that a high temperature (X) makes you sweat and lose a lot of body moisture. If you then don’t drink enough water to replenish it, you may get a headache. The intermediate variable (Y) through which the high temperature contributes to your headache (Z) is losing body moisture. Intermediate relations should not be confused with spurious relations, in which two variables have no causal connection, but appear to because of an unobserved third variable. An example would be the conclusion that beer cans in cars cause accidents, while it is obviously driving while being drunk that causes accidents.

Inequality often exerts its influence through such intermediate variables. These can be divided into two main types: socio-cultural and socio-economic variables.

Socio-cultural intermediate variables

In India, income inequality may be reproduced through the caste system and so contribute to low literacy, poverty and lower life expectancy among the members of the lowest class and the casteless. Caste is then the intermediate variable. Inequality may also lead to revolutions and uprisings through intermediate variables like rising expectations and a sense of dignity. As noted in The Spirit Level, the intermediate variables stress and status fear can be considered responsible for certain social consequences of inequality, such as obesity. Here, inequality is the independent variable: the cause.

Policies to diminish inequality in the long term do not necessarily directly focus on income inequality, but on factors like education and skills that help to increase income and therefore reduce poverty. With more and better skills and a higher education, people may get a job easier and earn more. Inequality can thus be reduced by improving the intermediate variables education and skills, which lead to a higher income and less poverty. Here, inequality is the dependent variable, which is caused by something else.

Socio-economic intermediate variables

Conditions in China in the pre-reform era left the country with relative low levels of inequality in access to productive inputs (most importantly farmland), which enabled the poor to profit from the benefits of economic growth. Conversely, in Brazil there are millions of landless farmers with low access to farmland. Low access to farmland is then an intermediate variable for income inequality.
In a recent report Oxfam showed that environmental degradation exacerbates social inequalities as the impacts of climate change disproportionately fall on poor countries and resource degradation fosters social conflict on resource use.1 Here, environmental degradation is an intermediate variable for social inequality.

  1. Oxfam (2012), Left behind by the G20? How inequality and environmental degradation threaten to exclude poor people from the benefits of economic growth.