The Effect of Socio-Economic Variables on Bread Demand Using AIDS Model

In this study, the effect of socio-economic variables on bread demand has been investigated using AIDS model and micro data. In this model, socio-economic variables such as age, gender and marital status of household breadwinner, his/her own level of education and that of the spouse’s, household size, and employment status and income level of household members have been used. A dummy variable is also used to account for implementation of targeted subsidies law is also used and, in this study, it shows the effects of this policy. To meet this end, the Almost Ideal Demand System (AIDS) is applied. This model has been estimated using the consolidated data and Seemingly Unrelated Regression (SUR) method and the information from more than 165,000 urban households in the country for the years 2007-2015 and for different income groups (low income, medium and wealthy). The results of this research show that, during the period under study, bread was an essential goods for all income groups. The price elasticity of bread demand for all income groups was 0/5. Therefore, bread is an inelastic goods for all income groups. Also, the coefficients related to household size, level of education for the breadwinner and his/her spouse, employment status and marital status of household breadwinner and the dummy variable of targeted subsidies law are positive and significant. The coefficient related to the age of household breadwinner for poor and middle-income households has been estimated to be positive and for wealthy households it has not been found to be significant .The coefficient belonging to the gender of the head of household for poor households has been estimated to be insignificant and for middle-income and wealthy households it has been estimated to be positive and significant.