Introduction

When I say that I have adopted the principle of dependent variables, I refer to a relatively simple but wide-ranging concept. When you dig into nearly every subject, it almost always refers to a dependent variable at some level. It’s closely related to the concept in systems thinking that everything relates to everything else.

I want to ask myself and others who read my material whether the dependent nature of what I’m discussing plays an important role in my conclusions.

I will keep this article brief because a thorough discussion of this topic could fill a book.

Does ignoring independent variables invalidate any comments or arguments I make? I want to always consider this question, and I propose that others do the same. For this discussion's sake, I will briefly mention some examples of what I would call market variables and a couple of non-market variables.

Market Variables

There are a myriad of dependent variables that appear in discussions about markets. The primary examples that come to my mind fit in a general category I would refer to as prices, including interest rates, wages, and goods prices.

I have tried to demonstrate earlier how neither the Federal Reserve nor any other actor can unilaterally control interest rates. When stating that the Fed is changing interest rates, one excludes the very important independent variables that together determine interest rates.

No one can unilaterally change the price of labor, commonly referred to as wages.

An offer made by an employer and accepted by an employee determines the wage. Contrary to popular opinion, the employer does not determine wages by himself. Trying to establish minimum wages amounts to regulating wage offers, which has wide-ranging effects on the labor market and the price of goods.

What I have just said about wage rates also applies to the prices of goods. Goods prices require an agreement between buyers and sellers. Trying to set maximums on the prices of goods restricts the behavior of one of the parties in the transaction. These restrictions ultimately distort the allocation of resources throughout the economy.

Non-market Variables

The number of what I would refer to as nonmarket dependent variables is essentially limitless. Independent variables determine your heart rate and the speed of a car results from the interaction of other dependent variables.

The important point here is always to ask if other variables are significant in any comments about the subject. If they are, they must be considered.

Several people use the dependent variable of absent fathers to explain high levels of crime, particularly in black neighborhoods. The increased number of unwed mothers may correlate with the increase in crime. It does not, however, explain why that’s true. We must ask whether the father's presence influences the offspring's behavior.

Conclusion

On the surface, distinguishing dependent variables seems unimportant. However, we should always consider the significance of the independent variables involved.

I will attempt on this website to always address the question of the significance of independent variables.