Evaluating the Consumption Behavior of Urban Families in Tehran Province

Abstract

The study analyzes the consumption behavior of families and allocation of their limited income to various goods and services. This serves as one of the main issues in economic policies. The main objective of this paper is to examine the issue in Tehran province during the period 2007-2015. This is done by using Almost Ideal Demand System Model (AIDS) and price and income elasticity dealt with through seemingly unrelated regressions (SURE). The results indicate that food and drink and tobacco products as well as housing, fuel and lighting are the essential items. Also, clothing and footwear, leisure and education, health, transport and communication are found to be luxury items. Price elasticity of housing, entertainment, education, and transportation is more than one, In other words, this group of goods are elastic. With regard to cross-price elasticity, in most cases, it is less than one when considered as a value absolute. Therefore, in most cases, the change of price in one group of goods will not make consumers change their demands on goods in another group.