Posted By University of Wisconsin-Madison
The classic reference on this topic is Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51, 1173-1182.
Most of what is written here comes directly from this classic paper.
* Moderator variables - "In general terms, a moderator is a qualitative (e.g., sex, race, class) or quantitative (e.g., level of reward) variable that affects the direction and/or strength of the relation between an independent or predictor variable and a dependent or criterion variable. Specifically within a correlational analysis framework, a moderator is a third variable that affects the zero-order correlation between two other variables. ... In the more familiar analysis of variance (ANOVA) terms, a basic moderator effect can be represented as an interaction between a focal independent variable and a factor that specifies the appropriate conditions for its operation." p. 1174
* Mediator variables - "In general, a given variable may be said to function as a mediator to the extent that it accounts for the relation between the predictor and the criterion. Mediators explain how external physical events take on internal psychological significance. Whereas moderator variables specify when certain effects will hold, mediators speak to how or why such effects occur." p. 1176
The general test for mediation is to examine the relation between the predictor and the criterion variables, the relation between the predictor and the mediator variables, and the relation between the mediator and criterion variables. All of these correlations should be significant. The relation between predictor and criterion should be reduced (to zero in the case of total mediation) after controlling the relation between the mediator and criterion variables.
Another way to think about this issue is that a moderator variable is one that influences the strength of a relationship between two other variables, and a mediator variable is one that explains the relationship between the two other variables. As an example, let's consider the relation between social class (SES) and frequency of breast self-exams (BSE). Age might be a moderator variable, in that the relation between SES and BSE could be stronger for older women and less strong or nonexistent for younger women. Education might be a mediator variable in that it explains why there is a relation between SES and BSE. When you remove the effect of education, the relation between SES and BSE disappears.
Source: http://psych.wisc.edu/henriques/mediator.html
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