In economics, the term household is understood to mean an economic variable that forms a uniform will and can act in a uniform manner. The number of members is irrelevant. There are different households in private and public forms. While private households are the focus of consideration for companies, economics is also dedicated to public finances.
In the following lesson you will learn everything about the concept of household in economics. Finally, there are some exercises available to help you consolidate the knowledge you have learned.
Why is the budget important?
According to percomputer.com, households are of enormous importance in economics. After all, these are economic units that also affect other actors. In contrast to companies, private households consume. Private households thus represent the potential buyers and demanders for a company’s products and services. This already shows the relevance of private households for companies.
Economics is particularly concerned with the economic behavior of households in the context of microeconomics. Numerous theories – based on economic principles – formulate different maxims to which households orient themselves when generating and using income.
What are households?
In the national economy, the household describes a social structure that includes one or more people who can form a unified will. The household is of considerable importance in the acquisition of income and its use.
The different households
The term household is used in different areas.
A basic subdivision is made into:
- private households
- public budgets / state budget
Different parts of the budget
The household is characterized and characterized by different terms. The following aspects in particular are critical when the budget is the focus. These differ depending on the household.
- Income and use as well as distribution
- Family in the household
- Household needs
Households: public and private households
Historical development of the private household
The private household is not a historical constant. Rather, the private household is subject to numerous changes and developments. Two terms are defining in the history of the private household:
- Self-catering household
- Procurement budget
At first, the self-sufficient household shaped the general image of society. This form of household dominated in agricultural society. A characteristic of a self-sufficient household was the production of the necessary means for personal use. There was no dependency on companies or the market.
In the agricultural society of Germany in the 15th century, the Müller family had a so-called self-sufficient household. The Müller family was able to provide for themselves by growing their own fruit and vegetables. No demand arose from the need and need for food. Thus, the Müller family was largely independent of the manufacturing companies and the food market.
In today’s service and information society, the procurement budget dominates. In-house production rarely or not at all – rather, gainful employment serves to finance livelihoods. With the money available, the household acquires the necessary products and services on the available market.
Public budget and state budget
However, the use of the term household is not limited to the private sector. In addition, there are also the public budgets and the state budget.
The concept of the public budget is understood to mean the composition of a financial economy from the public framework. The public budget does not serve to generate profits. Such amounts, which are booked as profit in companies, are called surpluses in a public budget. The public budget serves in particular to provide services of general interest and to maintain the infrastructure.
The so-called state budget is a form of public budget. At a hierarchical level, the state budget is at the highest level. The state budget includes all income and expenditure of the state.