Self-consumption refers to the circumstance in which a person uses the goods or services that she develops to meet her own needs. This, instead of selling such products in the market .
In other words, self-consumption means that the individual performs an activity, but the fruits that result from that work are not commercialized. Instead, they are used by the worker himself.
The concept of self-consumption is closely linked to the subsistence economy and, mainly, to agriculture. Thus, there are producers who consume all or part of the food they harvest. This is due to various circumstances. It may be, for example, that there is no modern means of communication that connects peasants with large markets.
Characteristics of self-consumption
Among the characteristics of self-consumption we can highlight:
- It is mainly observed in developing countries.
- Although it is mainly related to agriculture, it also applies in the case of some services. For example, if a person repairs their own computer.
- Self-consumption is declining worldwide. This, as a consequence of the decrease of the rural population.
- When farmers live in an economy of self-consumption, this can mean that their diet is not completely varied. Consequently, people’s health status will not be optimal.
- The theory of comparative advantagessuggests that self-consumption is not optimal. Ideally, the person specializes in producing what is most efficient and sells the result of their work. Then, with your income you can acquire the goods or services that best meet your needs.
Self-consumption in companies
The term consumption can also be applied to describe some operations of the companies . Specifically, in two types of situations:
- External consumption:Ownership of a good is transferred from the company to the partner or entrepreneur. For example, if the owner of a firm decides to take a notebook and pen that were part of the inventory for personal use.
- Internal consumption: The ownership of the good is not transferred. For example, if a company that sells coffee makers makes its employees available one of their machines so they can pour coffee while they work.
We can cite some examples of self-consumption such as the following:
- A farmer in the Andes Mountains grows potatoes to offer them in the nearest town that is several kilometers away. But it only manages to sell a part because the number of potential buyers is very small. Then, the remaining stock must be consumed by the producer himself and his family.
- A company is dedicated to the sale of vacuum cleaners, and decides to use one of the warehouse to clean the office.
- A family in the United States has its own garden where it produces several vegetables that they consume almost daily.