The determinants of expenditures with utilities in Brazilian households

Abstract

This study provides an analysis of the determinants of the per capita expenditure with utilities in Brazilian households. Using microdata from the 2017-2018 Brazilian Household Budget Survey (POF) we used a two-stage estimation procedure: in the first stage, a Probit for the probability of a household acquiring the good or service; and in the second stage, a Seemingly Unrelated Regressions (SUR) for the Engel functions for each good or service. We found that the household head characterization variables had a lower influence on the expenditure of water and sewage. The family size has a negative effect on the per capita expenditure of all utilities for all income groups, but its scale effects are higher in high-income families. Our study highlights the importance of sociodemographic characteristics as drivers of households’ expenditures and opens several opportunities for policymakers and the private sector to solve the heterogeneity and inequality that exists in Brazil.