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Estimating Electric Power's Equivalent Scale for the Urban Iranian Household

Author

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  • Salem, Aliasghar

    (Associate Professor of economics at Allameh Tabatabai University)

  • Fridzad, Ali

    (Department of Energy, Agriculture and Environmental Economics, Allameh Tabataba University, Tehran, Iran)

  • Amini, Mitra

    (Department of Economics, Allameh Tabatabe University, Tehran, Iran)

Abstract

Household equivalent scale is an index to measure the impact of household demographic characteristics, such as the householder’s age and gender, the number of household members, etc., and plays a significant role in measuring poverty and inequality. By taking into account demographic characteristics differences, this index facilitates the reasonable comparison of households’ welfare, and functions as a coefficient for the target household in relation to the reference household. Using income and expenditures data of Iranian urban household in the period of 2012-2018, this study measures the relative child cost of each urban household in Iran while estimating the Quadratic Almost Ideal Demand System (QAIDS) and price scaling by means of Nonlinear Seemingly Unrelated Regression. Also, it calculates the elasticity of income and price of electric power goods. The results illustrate that the relative child cost in Iranian urban households is 33% of an adult cost, and electric power goods in Iranian urban households is a necessary yet low elasticity commodity. Therefore, pricing policies may not significantly influence demand for this product.

Suggested Citation

  • Salem, Aliasghar & Fridzad, Ali & Amini, Mitra, 2020. "Estimating Electric Power's Equivalent Scale for the Urban Iranian Household," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 15(3), pages 295-312, July.
    • Handle: RePEc:mbr:jmonec:v:15:y:2020:i:3:p:295-312
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Economies Of Scale; Equivalent Scale; Household Welfare; Quadratic Almost Ideal Demand System; Consumption Economies Of Scale; Demographic Characteristics; MicroData; Childcost;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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