Improving Tests of Theories Positing Interaction

Abstract

It is well established that all interactions are symmetric: when the effect of X on Y is conditional on the value of Z, the effect of Z must be conditional on the value of X. Yet the typical practice when testing an interactive theory is to (1) view one variable, Z, as the conditioning variable, (2) offer a hypothesis about how the marginal effect of the other variable, X, is conditional on the value of Z, and (3) construct a marginal effect plot for X to test the theory. We show that the failure to make additional predictions about how the effect of Z varies with the value of X, and to evaluate them with a second marginal effect plot, means that scholars often ignore evidence that can be extremely valuable for testing their theory. As a result, they either understate or, more worryingly, overstate the support for their theories.