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

Aliasghar Salem (), Ali Fridzad () and Mitra Amini ()
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Aliasghar Salem: Associate Professor of economics at Allameh Tabatabai University
Ali Fridzad: Department of Energy, Agriculture and Environmental Economics, Allameh Tabataba University, Tehran, Iran
Mitra Amini: Department of Economics, Allameh Tabatabe University, Tehran, Iran

Journal of Money and Economy, 2020, vol. 15, issue 3, 295-312

Abstract: 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.

Keywords: Economies Of Scale; Equivalent Scale; Household Welfare; Quadratic Almost Ideal Demand System; Consumption Economies Of Scale; Demographic Characteristics; MicroData; Childcost (search for similar items in EconPapers)
JEL-codes: C33 D12 Q25 (search for similar items in EconPapers)
Date: 2020
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