Journal of Advances in Mathematics and Computer Science

This study established the place of location (a binary variable) as a mediating variable in the relationship between income and savings of middle income earners in Etsako East and West Local Government Areas of Edo State Nigeria. Due to distinct variability of the population and the uncertainty of its size, stratified random sampling using equal allocation was employed as our sampling design. A total of 924 valid responses (462 from each from both rural and urban middle income dwellers in the two local government areas) were selected and used for the analyses. Linear regression model and the logistic regression model were used to analyze the effects which form the basis of mediation. Because effects of different variables measured in different metrics are combined and compared, standardized coefficients and standard errors were used to test the significance of the mediated effect. Results show that Location is a partial mediator in the relationship between income and savings, and the mediated effect is statistically significant. It was also observed that about 7.5% of the total effect is mediated by location; the size of the mediated effect is 0.13 (medium). We therefore recommend that these metrics for binary mediating variables in mediation analysis should be extended to related cases where the mediating variable will be of three possible ordinal outcomes. It is also recommended that this study should be extended to a wider geographical region like the whole of Nigeria, South-South, South-West, South-East, and other geo-political zones of Nigeria.