quantile regression analysis of household energy demand in iran using income-expenditure national survey (2016-2023); heterogeneity and key characteristics

Iran faces pressing challenges in managing household energy consumption, as policymakers seek effective reforms. designing successful policies requires understanding household behavior and the diverse determinants shaping energy use. this study examines whether iranian household energy demand exhibits heterogeneity across consumption levels and explores the influence of household characteristics on energy demand. using panel data spanning 2016-2023 from more than 212,000 observations covering 128,432 households from the iranian household income and expenditure survey, we estimate separate demand equations for electricity and gas across urban and rural locations using correlated random effects quantile regression. this approach controls for unobserved household heterogeneity while revealing how elasticities vary across the expenditure distribution. our analysis reveals substantial heterogeneity. for urban electricity, income elasticity ranges from 0.147 to 0.221 and price elasticity from -0.378 to -0.560. rural electricity shows dramatically greater heterogeneity, with price elasticity increasing from -0.343 to -0.839 across the distribution. for gas, we document near-unit price elasticity across urban (-1.083 to -0.956) and rural (-1.029 to -0.978) households, implying price increases reduce consumption proportionally while leaving expenditure unchanged. higher education reduces gas consumption particularly among high users, while homeownership and dwelling area show strong positive effects increasing across quantiles. these findings confirm that iranian energy demand is highly heterogeneous: household characteristics exert varying influences depending on expenditure level, location, and energy type. the 2.4-fold rural electricity variation and stark electricity-gas asymmetry have important policy implications, underscoring the need for differentiated pricing, location-specific tariffs, and energy-specific reforms rather than uniform policies.