The Socio-Economic Determinants of ICT Expenditures in Iranian Urban Households Using Heckman's Two-Stage Method

Over the last decade, there has been a clear increase in ICT expenditures by households, both in value and as a proportion of total expenditure. Such a trend, however, has not affected all households in the same way. This study analyzes the socio-economic determinants of urban household expenditures on ICT goods and services in Iran in the year 2019 based on microdata from the Household Budget Surveys. To achieve this, we have applied Heckman's two-stage model, aiming to identify the determinants affecting the likelihood of spending on ICT and the amount spent. Our analysis further dissects ICT spending into its constituent components, including IT goods, IT services, communication goods, and communication services. Based on the results, per capita income has a significant and positive effect both on the probability of spending and the level of per capita ICT expenditures. Moreover, households led by male heads are more likely to engage in ICT spending, although their actual expenditures are lower. Households with larger sizes and households which have a married head are more likely to spend on ICT. The impact of education level and age of the household’s head on both the probability to use and the amount spent is positive and significant. There is a negative quadratic relationship between the age of the household’s head and both the probability of spending and the level of per capita ICT expenditures. Furthermore, consumption economies of scale exist in ICT expenditures. The likelihood of spending on all types of ICT components is positively influenced by per capita income, size of the household, education and age of the household’s head. Concerning the level of per capita expenditures on IT goods and communication goods and services, they are higher for households who have higher per capita income. There is a negative quadratic relationship between the age of the household’s head and both the probability of spending and the level of communication services expenditures. Households with highly educated heads tend to allocate higher budgets to communication goods and services. Lastly, consumption economies of scale are observed in IT goods, IT services, and communication services.