Sugar is one of the strategic goods in the basket of households in each country and it plays an
important role in supplying the required energy. On the other hand, it is one of the goods, which
Iranian government is about to change its subsidy strategies. To design useful sugar subsidy
strategies, it is necessary to know sugar position in the basket of households and be familiar
with households & apos; sugar demand or consumption behavior. This research estimates sugar demand
for Iranian households by using time series of 1984-2008, which is taken from central bank of
Iran. In this paper, first independent and dependent variables of household sugar demand
model are chosen based on the literature review and theory of demand. Then, sugar demand is
estimated by OLS technique and linear regression. The preliminary statistical observations such
as Durbin-Watson, F statistic and R2 indicate that the regression is admissible. The results seem
plausible and consistent with theory and show that sugar demand in Iranian households is
associated with household expenditure, relative sugar price, family size and indicate that
demand of sugar is affected during the war time. The results also show the income elasticity is
0.8 and price elasticity is -0.2 which means sugar is essential good for Iranian households and is
inelastic to price.