Consumption & Its Derivatives Essay

The economic life of society is based on the need to meet the needs of people in various economic benefits. In turn, these benefits are grounded on the basis of economic resources that are at the disposal of society and its members.

In economics, consumption is a fundamental concept that is also studied by many other social sciences. In fact, economists are greatly interested in the relationship between income and consumption itself, and therefore this particular concept plays an important role in economics.

The UNDP Human Development Report states that:

‘consumption that enhances human development must be shared equally (ensuring basic needs for all); strengthening (improving human capabilities and enriching the lives of people, encouraging lively, creative individuals and communities); socially responsible (not compromising the well-being of others); and environmentally sustainable (not mortgaging the choices of future generations)’ (quoted in Reisch 1).

By its nature, consumption is equal to the acquisition of goods or services. Consumption is greatly associated with income or expenditure savings. Hence, considering consumption as a process to meet the needs is based on the postulates of economic theory. Consumption has traditionally been seen as a material process, rooted in human needs, either as an ideal practice, rooted in symbols, signs and codes that is aimed at using ‘goods and services that respond to basic needs and bring a better quality of life’ (Reisch 1).

If you do not address issues concerning the difference between methods and objects of study, the fundamental divide between these disciplines lies in the general methodological prerequisites ‘in the approaches to the modeling of human action.’ Economic theory regards a man as part of economic relations: due to the limited resources the individual is looking for the most effective ways to meet their own needs and expectations. A person (subject) in this case can be described as a ‘utility maximizer.’ Based on the economic model, it is possible to clearly trace atomism of the subject and the relative independence of his or her decisions.

When we speak about ‘consumption’ as a concept we mean consumption itself used by consumers (i.e. separate individuals acting in order to meet the needs of their families or other groups of individuals). In such a case, industrial consumption of goods is not considered to be consumption, but rather the use of resources in production. Secondly, non-productive consumption carried out by other individuals also does not fall under the category of ‘consumption’ and is viewed separately. (That is, for example, the purchase of food products in order to create state reserves or to help the starving people or animals is not considered to be consumption itself).

Hence, we can say that consumption is synonymous with the purchase of goods and services by consumers. In fact, consumption is a customer satisfaction of their needs with the help of the purchased services. Thirdly, consumption is seen as a conscious rational process to meet the needs, carried out with the help of public benefits, consumer-owned resources and goods, as well as the acquisition of new products and services.

Consumption, as well as any other conscious activities has various objectives that significantly differ from industrial and personal consumption.

Industrial consumption is consumption of raw materials (raw materials, fuel, energy), implying their further processing in order to get profit. At the same time, making a profit is the main motive of industrial consumption.

Individual consumption is the so-called consumption in the true sense of the word. However, it can also be seen as production. As a natural being every person seeks to satisfy his or her natural needs and purchases goods and services that ensure the reproduction of his or her physical and mental strength (consumption of food, clothing, housing within the minimum conditions of rest, etc.). As a member of society a person consumes goods and services, which allow him or her to reproduce himself or herself as the representative of the different categories: employees, family members, friends, sports clubs, summer communities, etc.

Thus, taking the above-mentioned information into consideration, it is possible to draw a conclusion that consumption is probably the final act of economic activity. It is the use of goods and services to meet current and future needs and expectations. When it comes to consumption, first of all there is an idea of ​​the consumption functions. However, it is possible to consume not only consumer goods (food, clothing), but also capital goods (machinery, equipment, building materials). In principle, household consumption can be determined with sufficient accuracy. Some products, such as food, beverages, and a variety of different services can be consumed immediately. Others, namely durable goods – cars, furniture, immovable property – are consumed gradually over a number of years, i.e. we can say that they are consumed in parts. The consumption of these goods is not estimated according to their full value, but based on the cost of the amount of services provided by durable goods in a given period of time, such as a year. Each person must constantly decide which part of the income to spend (consume) today, which he or she can postpone for the future – in the event of an emergency, illness, inflation, in order to accumulate funds for the purchase of expensive things. One part of the income is spent on current consumption and the other is deposited in the form of savings. All in all, consumption is a fundamental concept studied by many other social sciences and seen as a close relationship between income and consumption itself.


Works cited

Friedman, Jonathan. Consumption and Identity (Studies in Anthropology & History). Washington, DC: Taylor & Francis, 1994.

Hernandez Nunez, Rafael J. The Consumption Expenditure Function. Know, Think, Write, 2014.

Reisch, Lucia A. A Definition of “Sustainable Food Consumption.” Scp-knowledge, n.d. Web. 12 March 2015. <>.

The terms offer and acceptance. (2016, May 17). Retrieved from

[Accessed: January 20, 2022]

"The terms offer and acceptance.", 17 May 2016.

[Accessed: January 20, 2022] (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: January 20, 2022]

"The terms offer and acceptance.", 17 May 2016

[Accessed: January 20, 2022]

"The terms offer and acceptance.", 17 May 2016

[Accessed: January 20, 2022]

"The terms offer and acceptance.", 17 May 2016

[Accessed: January 20, 2022]

"The terms offer and acceptance.", 17 May 2016

[Accessed: January 20, 2022]
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