Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
A Survey the Effect of Direct Subsidy on Rural Households
Purchase Decision
Hassan Danaei*
The Iranian targeted subsidy plan is an important part of economic development plan that is
associated with people and any changes in the subsidy, will change their interests.This study
examined the effect of Direct subsidy of energy on Purchase decision of torbat-e- jams rural
households, and Therefore the method of this research is descriptive study, with purpose of
applied research and in terms of data collection, is survey. The tools of data collection are a
questionnaire consisted of 12 questions and the sample size is 103 households from the central
villages of torbat-e- jam. Research data using statistical methods, such as one-sample Student ttest, analysis of One-way variance (ANOVA).data analaysis shows that, Direct subsidies of
energy has a significant effect on consumption of essential goods of rural households of torbat-ejam but hasn’t increased consumption of intermediate goods.also that is moderately effective on
consumption of luxury goods.
Key word :Subsidy, Consumable goods, luxury goods, intermediate goods, essential goods
1. Introduction
Iran's economy is suffering for years from chronic problems and despite the acknowledged
difficulties in different states, so far important steps have not been taken to reform the
economic structure of the country. The ninth administration with knowledge of the root
problems of the economy, , began the basic plan for economic reform, several months ago
which result was a comprehensive plan entitled "economic development plan".The state's
economic development plan for reforming these sectors, comprehensive programs were
prepared and before its unveiling ,Exposed to critical review by experts, economists and
various commentators to be complete and polished as possible. The subsidies, is the most
important application of the seven programs economic development plan that are associated
with people. In fact, the subsidies that were carried out in summer 1390, including economic
policies that according to many discussions in scientific circles, social and policy, caused
expectations about how to implement system and its effect on economic agents.
In this regard, the people or consumers are the biggest beneficiaries of subsidies and any
change in subsidy naturally will change their interests. consumers, form their expectations
.based on changes in prices, including commodities prices and changes in prices of other
goods and elimination of non-cash subsidies and in this way try to take advantage of all
available information. Recently presented data on the prices of subsidized, but there is
uncertainty about the impact of the removal subsidies on the prices of other commodities. It is
natural that in addition to the government, the media could also be involved in the formation of
consumer expectations, because people use all of available resources about learning
economic issues, that in the meantime, the media and economists are the most important part
of information sources . In this research also try to visit and interviews with a number of
consumers of targeted subsidies to discussed further about the Behavior and effects of the
scheme on consumers. Therefore, the necessity and importance of this study can be
summarized as follows:
*Department of Management, Torbat-e-jam Branch, Islamic Azad University, Torbat-e-jam, Iran, Email address:
h_danae@yahoo.com
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2

the effect of cash subside payment on the Reform of Consumption Pattern
So the main question of this study is that what is the effect of direct subsidies of energy
on purchase decision of torbat-e- jams rural households,?
2. Research Objectives



determine the effect of direct subsidies on purchaseing the essential goods of Torbat-ejams Rural households
determine the effect of direct subsidies on purchaseing the intermediate goods of
Torbat-e-jams Rural households
determine the effect of direct subsidies on purchaseing the luxury goods of Torbat-ejams Rural households
3. Review of the Related Literature
3.1 subsidies and targeted subsidies
subsidies often is considered to work against taxes and means of transferring cash to state
institution of the private sector. subsidies has been defined in Oxford culture such: a sum of
assets that helps public industry or a profession to keep down the price of goods or
services.(zare,1388). The subsidy system has been inherited from the Iran-Iraq war era but
was never abolished. Iran is one of the largest gasoline consumers in the world, ranking
second behind the United States in consumption per car.The government subsidy reform has
been years in the making for various reasons.Iran's Supreme Leader has backed the
government's latest subsidy reform plan. The administration has said earlier that it will be able
to allocate different payment amounts to different people. positive or negative subsidies is
typically a normative judgment. As a form of economic intervention, subsidies are inherently
contrary to the market's demands. Thus, they are commonly used by governments to promote
general welfare (e.g. housing, tuition, sustenance). However, they can also be used as tools of
political and corporate cronyism. In a general sense “targeted subsidies “can be defined az
'reduced or eliminated the subsidies of increased income families and granted subsidies to
low-income families'.
3.2 essential goods
A physical item required by a consumer in order to sustain health or life. Some essential good
types that are produced by business operators include food, water, gasoline and heating fuel,
as well as residential building materials that can be used to construct homes for shelter.
3.3 intermediate goods
Material or item that is a final-product of a process, but is also used as an input in the
production process of some other good. For example, sugar is consumed directly as well as in
the manufacture of food products. See also intermediate product.
3.4 Products which are not necessary but which tend to make life more pleasant for the
consumer. In contrast with necessity goods, luxury goods are typically more costly and are
often bought by individuals that have a higher disposable income or greater accumulated
wealth than the average.
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
4. Research methodology
4.1Methodology
the research is applied as far as the aims and objectives are concerned and it is survey
descriptive as far as the nature and method are concerned.
4.2 Method of Data Collection
The questionnaire in this study consist 12 multi choice questions. Also we gathered some
demography information from respondents in this questionnaire. We should mention about the
measures that we have used a spectrum in which according to the aim of the study. We should
mention about the measures that we have used a spectrum in which according to the aim of
the study, questions have the choices (from Completely disagree to Completely agree) .
Completely
agree
agree
No idea
disagree
Completely
disagree
Reliability and accuracy are from the scales and measurements of the scientific studies and
are from the most important characteristics in an effective and accurate information gathering.
Regarding this subject, in this study, the measured α from research parameters is calculated
0/82. As it is obvious, in all approaches Cronbach α is accepted.Primarily in all researches,
there are some time, place and subject frames which should be defined carefully.
every research is defined with time, place and subject parameters. We will explain these 3
parameters
below completely:
4.3 Time Domain (Zone):
This research started in 1 April 2010 as a primary study and finished in the last of January
2011.
4.5 Statistical Universe and Sample
103 person sample is selected randomly among these people based on STATISTICA
Npq
Software n 
in order to decrease errors and increase accuracy due to
( N  1) D  pq
difficult access to all statistical universes.
5- Method of Data Analysis
Research data using statistical methods, such as one-sample Student t-test, analysis of Oneway variance (ANOVA) \by spss and STATISTICA0.7 software.
Table 1: Descriptive statistics of direct subsidy on rural households purchase decision
Variables
number
means
minimum
maximum
Standard
Deviation
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
essential goods
luxury goods
intermediate
goods
total
103
103
103
61/4
51/5
42/2
0/0
12/5
0/0
100
75
100
24/4
12/4
32/1
103
51/7
12/5
91/66
22/96
As shown in Table 1 - the mean of the variables of (effect of direct subsidy on rural households
purchase decision) is defined as 51/7 and SD 22/96. The minimum and maximum scores for
the main variables were investigated 5/12 and 66/91 and Shows that What was the impact of
triables on rural households purchase decision of Torbatjam city .Table 2 - Results of
hypotheses related to the research questions.
Variables Title
means
1
2
essential goods
luxury goods
61/4
51/5
Student ttest
4/7
1/2
3
intermediate
goods
42/2
5/2
Pvalue
0/000
0/109
0/000
Test result
effective
moderately
effective
Not effective
As Table 2 implies the probability (P-value) calculated for some components were significantly
smaller than the 0/05. By the reported results, we can conclude that increased cash payment
of subsidies ,Increased consumption of essential goods of rural households Torbatjam city.
In contrast, the cash payment of subsidies was not effective in increasing the consumption of
intermediate goods in of rural Torbatjam city.
The findings , based on Table 2 showes that cash payment of subsidies was moderately
effective on consumption of luxury goods of rural Torbatjam city.
Table 3 - ANOVA to compare the scores mean
Variables
effect on consumption of essential
goods
effect on consumption of
intermediate goods
effect on consumption of luxury
goods
n
Xi
Si
F0
freedom
Degrees
P-value
25/8
6/714
0/000
103 61/4 61/4
103 51/5 51/5
103 49/7 49/7
Based on quantities that has been calculated in table3 , in Comparison of P-value 000/0
significance level is ά=0/05 it can be concluded that the null hypothesis is rejected at the 5%
level strongly.it Means that there is a significant difference between mean scores and
respondents' views regarding the effectiveness of direct subsidy on rural households purchase
decision.
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
The conclusion from the results presented in this section can be argued that 95 percent of
these respondents based on viewpoint is:
"The impact of direct subsidy on rural households purchase decision
Torbatjam city, is not identical. »
Table 4 - Results of Duncan's test for the comparison of the effect of direct subsidy
on rural households purchase decision
Variables
consumption of essential
goods
consumption of
intermediate goods
consumption of luxury
goods
First
61/4
Second
Third
51/5
42/2
The results of the test showed that there were significant differences between the means of
variables.
6. Conclusion
1 - In a general conclusion should be acknowledged that the total cash payment of subsidies
on the consumption of rural households had no significant effect that the payment of cash
subsidy against inflation caused seems natural.
2- Contrary to the general impression, paying cash subsidies to rural households has not
spent on luxury goods and unnecessary costs.
3- According to the results of one-way ANOVA and Duncan's test results in Table 3, can be
concluded that Paying cash subsidies to rural families have the greatest effect on the
consumption of essential goods.
4- According to the above results, it is suggested that the amount and manner of payment of
cash, further studies should be conducted that be able to decide. The following are some
themes that can be complementary of study, it is pointed out;




assess the satisfaction of paying cash subsidies in rural and urban areas
Evaluation the effect of cash subsidies on life quality in rural and urban areas
effects of inflation cash payment of subsidies
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