Households provide a market economy. Households as Market Entities

The household as a participant in the economic process is a qualitatively special institutional economic unit .

The institutional economic unit is generally understood as the lower limit of fragmentation and organizational design of the economic function. She represents organizationally completed economic formation, isolated within the economic system, retaining functional certainty and being the center of independent decision-making. In this way, institutional economic unit:

It is an integral structure

Has special goals in the economic system of a higher order;

Performs a function that cannot be decomposed without loss into the functions of its constituent elements;

Economically isolated as a separate subject of ownership of resources and results of its own activities;

It is an independent participant in economic interactions, freely makes economic decisions and bears responsibility for them.

There are two types of institutional units in the economy: the firm and the household. They differ in the main function within the economic system. If the main function of the firm is to produce goods to satisfy the needs of other entities, then for a household, the main function is to reproduce and realize human capital as a source of wealth .

In this case, human capital is understood as a set of knowledge, practical skills and experience of a person, realizing which, he creates elements of wealth. The concept of "human capital" is not identical to the concept of "personality". The household provides education, upbringing, satisfaction of material needs only in the formation, restoration and development of the productive qualities of a person. work force. The issues of the formation and reproduction of a person's personality, his socialization and upbringing are included in the function of the family, but are outside the function of the household.

The reproduction and realization of human capital as a source of wealth is the main, but not the only, function of the household. Along with it, the most important responsibilities of the household are:

Insurance. It means providing household members with a guaranteed level of well-being, regardless of the occurrence of unforeseen circumstances. Thus, staying within the household for an individual turns into a decrease in the level of uncertainty of his being.

Protecting the weaker household members by the stronger ones. Family members differ in their accumulated human capital. Some of them do not own such or the size of their individual human capital is not able to provide an acceptable level of consumption. Under these conditions, the stability of the family implies the maintenance of such members on the basis of mutual assistance and the redistribution of the benefits received within the family.

As a form of bringing people together to carry out joint activities for the reproduction of human capital, the household meets the characteristics of an organization. An organization is a group of individuals acting together and coordinating their behavior to achieve common goals.

As a set of individuals, the household represents the social system. Individuals forming this system are carriers of different interests, values, preferences. Such internal differentiation of the household makes it difficult to coordinate the activities of its members and, other things being equal, reduces its effectiveness. Therefore, ensuring effective joint activities within the household in accordance with the general economic goal of the family involves:

Overcoming the difference of individual interests and replacing it with a common interest;

Subordination of the behavior of household members to the common interest.

As in a company, the solution of these problems is based on the redistribution of the rights of its members within the family through their delegation. Parents - the right to control the actions of children, in return for guaranteeing children protection and ensuring their interests. One of the members of the household, acquiring the status of the head of the family - the right to control the formation and expenditure of the family budget in exchange for ensuring a guaranteed and higher level of welfare for members and a balanced consideration of their interests.

As a result of the redistribution of rights, their asymmetric structure arises. Thereby, the household can be seen as a special case of power relations in the control of joint economic activities. Unlike the firm and the state, these relations are not positional, but personified.

At the head of the power structure of the household is its head. He is the informal leader of a household-organized group of people who:

Is the guarantor of the sustainability of the welfare of the household;

Manages the family budget and makes other economically significant decisions;

Represents the interests of households in its relations with other persons.

The head of the household is not any of its members, but a person who has a comparative advantage in relation to the rest. Usually this is the person with the highest social status, income level, leadership qualities, experience, etc.

The emergence of the powers of the head of the family as a result of their endowment “from below”, by other members, may have a different mechanism. Powers may arise either as a result of spontaneous informal empowerment from below, or as a result of a contract (formal or informal) between the head of the household and his members.

The exercise by the head of his power within the household in order to maximize the welfare of its members involves decision-making. Depending on the type of family and the nature of intra-family relations, there may be a different model for their acceptance: authoritarian, consultative, consensual (democratic). In conditions of high uncertainty in the external environment of the household and the differentiation of the cognitive abilities of its members, the phenomenon of “the division of spheres of influence” is often encountered, when different members of the household have priority in solving different issues. Thus, the presence of a head does not mean an exclusively centralized procedure for making decisions that are significant for the household.

The exercise by the household of its functions requires a certain set of actions that must be performed by its members. Hence the need to personify these actions as the roles of household members. The distribution of roles means fixing the position of a particular member of the household in the system of organizing his activities and the function that he must perform, occupying this position of the function. It also involves determining the pattern of behavior expected by other members of the household from the performer of a particular role. The distribution of roles is a factor in the optimal use of the resources of the human capital of the household in order to maximize its well-being. It involves taking into account differences in the abilities and preferences of household members.

The importance of households in the economy is determined by the fact that, along with the state and firms, they are participants in the economic cycle of resources and income, which ensures the continuous transformation of society's limited resources into its wealth. However, it must be taken into account that the role of households is different from the role of other participants. The difference is connected not only with the peculiarity of the economic function of households, but with their place in the economic system.

Households are the primary elements of the economic system. Firms and government are secondary to neitherm. The secondary position of firms is explained by the fact that they are legal entities (fictions) that are created by people and belong to them along with the results of their activities. But these people, in turn, are members of households. Therefore, ultimately, households act as subjects of ownership of property and the results of the functioning of firms that determine the goals and order of their activities. The secondary position of the state in relation to households in the system of economic coordinates is determined by the fact that the state was created by people, and its activities are ultimately subordinated to the interests of citizens, being aimed at creating institutional prerequisites for the stability and efficiency of their economic activities. In addition, it is the households that finance the activities of the state.

The inclusion of a household in the economic turnover is characterized by diversity. Firstly, household activities include areas of activity that are fundamentally different in the nature of economic ties, namely:

The home economy as a household activity carried out within its framework (cleaning, cooking, laundry, childcare, etc.). For this activity, internal interactions between family members are dominant.

Market relations with other subjects of the economy. In this case, the external relations of the household are of decisive importance.

Secondly, performing its economic functions, the household plays different roles. Namely, how:

The subject of consumption, presenting for products and services that can be produced both independently and purchased on the market.

The subject of savings and investments, forced by the precautionary motive and, striving to increase his well-being in the long run, save a part of the income received, directing it to one degree or another for investments.

The subject of the supply of resources. First of all, the main resource for firms and the state is human capital. At the same time, it may offer for sale or lease other resources (land, inventory, intermediate products of its own production, etc.)

The subject of the offer of goods. A household may enter into direct economic relations with others, offering goods either produced by its members or previously acquired in the market.

Taxpayer. In this case, the household appears as a source of financing for the activities of the state.

Transfer recipient. In this capacity, the household turns out to be a participant in the state's redistributive policy aimed at reducing the level of social inequality.

3 . Economic Behavior of Households

The household as an economic entity in its activities pursues the goal of maximizing its well-being through the use of the limited resources at its disposal. I.e, household activities comply with the principle of rationality . Institutional economics, however, proceeds from the fact that the household is not a structure that fully implements this principle. That the household is not a rational optimizer and he, as an economic subject, is characterized by boundedly rational behavior, due to several reasons.

First reason associated with the blurring of the goal of maximization - with the assessment of the welfare of the household as a motive for its behavior. The well-being of a group of individuals united within a household is a value derived from the well-being of each of them. The household, in principle, cannot, as an individual, maximize its utility as such. It has no indifference curves. A household's utility maximization can therefore only take place as a maximization of the sum of the utilities of its members. However, in this case there are obstacles:

There is no unambiguous understanding of what constitutes the welfare of a household as the sum of the welfare of its members. It may mean the sum of the value of benefits received by members of the household, the sum of their utilities from the benefits received, etc.

The qualitative content of welfare and its structure are not universal. They differ not only in different economic systems, but also in relation to households existing in the same economic system. The subjective perception of the form of wealth is significantly influenced by the social environment, the formal and informal rules that exist in society and its individual social segments. Changing the rules can change the perceptions of household members about what benefits it should be associated with. Therefore, in one case, the maximization of welfare means can be associated with an increase in consumption, in another, with an increase in prestige in the eyes of others, in a third, with an increase in public approval, etc.

Each member of the household, as a carrier of special interests and preferences, is characterized by its own, different from the others, indifference curve. Moreover, the difference has not only a quantitative cut (slope to the origin, curvature), but also a qualitative one, since the set of benefits, reflecting the subjective perception of utility, is purely individual. Reducing individual curves to an integral curve under these conditions is not possible. The redistribution within the family of opportunities for access to vital and spiritual goods as a tool for maximizing well-being is losing unambiguous guidelines.

The second reason The fact that the rationality of household behavior is not complete is associated with the uncertainty factor that accompanies their activities. First of all, we are talking about the uncertainty of the environment. Household members and, in particular, its head, who is responsible for making significant decisions, operate in conditions of imperfect information and limited knowledge about the situation. The problem is exacerbated by the fact that households, when making decisions in the face of such uncertainty, face cognitive limitations. Under these conditions, the optimal choice turns out to be unrealistic for them.

Along with the uncertainty of the objective circumstances of the activity of the household, there is also the uncertainty of the subjective plan. Many actions of the household are carried out unconsciously or spontaneously. Decision-making in this case occurs unpredictably, without relying on logic and adequate procedures, which does not correspond to rational behavior.

Third reason associated with the fact that the decision-making process is heterogeneous and multifaceted. Usually, a household, seeking to maximize well-being in conditions of limited resources, is forced to make a choice simultaneously in several heterogeneous areas. In particular, they have to choose:

Between employment and leisure;

Between current and future consumption;

Between income saving options.

Each of these forms of choice has its own special criteria and prerequisites. Therefore, it is impossible to bring together the particular results of these forms and obtain a general result that is the best for each of them.

Fourth reason incomplete rationality of household behavior is associated with their exposure to the influence of the institutional environment. It directly affects the results of the choice, forming restrictions. Influence is carried out in two directions. First, by forming preferences and incentives for the behavior of the household and, thus, influencing the system of goals of its behavior. Second, by structuring the available uses of household resources. At the same time, the impact of the institutional environment is not unambiguous, but affects different forms of choice in different ways. So the choice between employment and leisure depends on the extent to which household members have personal freedom. And the choice of how to save income (for example, between keeping it in cash and investing) depends, in particular, on the state of the investment infrastructure and the investment environment.

The household's embeddedness in the corresponding social structure and its exposure to the influence of the institutional environment not only limits the degree of rationality of its behavior, but qualitatively changes the nature of this behavior. In their activities, households implement rather than goal-oriented, but value-rational behavior.

Forced to act in a limited rational way, households base their life activity on rules that correspond to the specifics of rational behavior in a family economy. These include:

- Satisfaction as a model of boundedly rational behavior. In the process of considering possible options for action, the household chooses the first option that satisfies pre-set requirements.

- Agreement on public opinion as a way to coordinate behavior. An individual household tends to act in a particular situation in the same way as most others. Under conditions of uncertainty and limited cognition, such behavior appears to be less risky, since mass choice usually reflects better knowledge.

- Accounting for customs when making decisions. Customs are a social phenomenon. They crystallize the preferences developed by society regarding certain aspects of social behavior. Customs are protected by social sanctions, so the choice of households to follow them is not completely free. Acts contrary to customs complicate the problem of behavior coordination, which leads to an increase in transaction costs for households.

- Building on habits and routines. Habits and routines are certain stable stereotypes of actions, certain well-established forms of behavioral response to some recurring events. Their difference lies in the degree of awareness of the choice in favor of stereotypical behavior. In contrast to customs, habits and routines represent a feature of the behavior of households, due not to external social pressure on them, but to their purely individual choice.

Household activities are largely carried out according to ingrained rules. This template behavior solves a number of important problems. Firstly, it helps the household to reduce the costs of searching for information and making decisions, saving attention and focusing it on the main issues of life. Secondly, it ensures the creation of a controlled and predictable internal environment for each member of the household, which helps to reduce uncertainty and allows for reliable planning of individual behavior. Thirdly, it creates an autonomous internal space, isolated from the external environment and being a protective shell for the private life of household members.

The high role of habits and routines in daily activities contributes to the formation of a stabilizing function of households in the process of economic evolution. Revision of stereotypes of behavior of household members is an extremely inertial process. This conservatism of behavioral preferences becomes a barrier to changes in the institutional environment, as a result of which these changes are stretched over time.

Household budget

One of the key criteria for distinguishing a household from a family is that it has a separate budget. In this case, the household budget is understood as the system of education and use of the fund of its funds. The concept of the general budget does not imply the consolidation of all the resources of household members in it. In addition to contributions to the general family budget, each family member, as a rule, also has personal funds.

The formation and spending of household budget funds is specific. In contrast to the firm budget and the state budget here:

The structure of income and expenses is significantly influenced by the state of the external environment of the household.

There is a strong dependence of the structure of household expenditures on the amount of income. However, this dependence is not absolute. Often, spending is oriented not to the amount of current income, but to the desired level of household consumption.

There is a pronounced hierarchy of priorities both in terms of income and expenses. There are the most important income and expenditure groups common to the mass of households.

The ratio between income and expenses, as well as the structure of these sections of the budget, is strongly influenced by the life cycle of the family. They undergo significant changes as the phases of this cycle change.

The budget process is carried out without clear rules and procedures. Usually there is no accurate accounting of expenses and income. Full and systematic balancing of the budget is not an absolute rule. Many items of expenditure are not planned, financing of individual items is sporadic and is carried out on a residual basis.

The specificity of the household budget is manifested in the structure of their income and expenditure. It should be understood that not all household income has a monetary form and, therefore, is reflected in its budget. In addition to cash receipts, the gross income of the household also includes income in kind: products received in personal subsidiary plots or in kind, as well as benefits, subsidies in kind. Similarly, household spending is not limited to spending money alone. Household members satisfy their various needs both by using cash income for the purchase of goods and services, and by self-sufficiency in kind, which occurs due to the own labor activity of individual members of the household.

Household cash income is the amount of money that a household (family) has to cover its expenses. Household income is generated from several main sources. Among them: income from home production, wages, income from entrepreneurial activities, income from securities, insurance compensation, rent for leased property, income from the sale of property, various kinds of social payments, gifts, etc. Essential characteristics of income the household budget are the uniformity and reliability of their income. Depending on the uniformity of income, all incomes are usually divided into regular, periodic and one-time. From the point of view of the reliability of income in the structure of household income, guaranteed (for example, pensions), conditionally guaranteed (for example, wages) and non-guaranteed are distinguished.

Household expenses. They can also be classified according to different criteria. First of all, they should be distinguished by their goals. In this regard, the structure of expenditures should include consumer spending (for paying for goods and services), mandatory payments, savings and savings in deposits and securities, the purchase of foreign currency, and the increase in money on hand. Household savings occupy a special place in this classification. They are largely forced. This is due to the fact that any household under conditions of uncertainty is faced with the need to have a reserve for unforeseen situations in order to prevent a significant drop in the achieved level of well-being. In addition, there is an unavailability in the short term of certain goods necessary for the household due to their rather high cost and the current lack of funds.

An important criterion for classifying expenses is their regularity. From this point of view, it is customary to distinguish between fixed expenses (for food, utilities, etc.), regular expenses (for clothes, transport, etc.) and one-time expenses (for treatment, durable goods). In view of the limited financial resources of the household and the need for their optimal use, the priority of expenditures, the degree of their urgency from the point of view of maximizing the welfare of the household, matters. According to this criterion, all expenses can be divided into priority (necessary) expenses (food, clothing, medical services), secondary or desirable expenses (education, insurance premiums) and other expenses.

5. The evolution of the household

In its development, the household has gone a long way, within which its function, structure and other characteristics have undergone significant changes.

Dominated until the 20th century, its main economic function was the survival of family members. Such a household plays the role of a production and economic unit that ensures the supply of the main types of labor products necessary to meet the needs of family members. It represents a community of people (usually representatives of several generations belonging to the same family), based on common economic activities and common traditions..

The defining focus of the traditional economy on domestic consumption does not exclude its external interactions. This type of household supplied the main types of products of labor of its members and other subjects. Foreign economic relations included relations of two types. Firstly, due to the relationship of personal dependence, the supply of products to the owner of the land and other resources that households themselves did not have at their disposal. Secondly, the supply of the main types of labor products to the market. With the development of market relations and the destruction of relations of non-economic dependence in the economic sphere, the ratio of these types of external relations of the household changed. At the same time, as the productivity of labor of household members grew, a steady trend was formed towards a decrease in the share of the product created within its framework directed to domestic consumption.

The high importance of self-sufficiency in the functioning of a traditional household determines dominantthe role of internal communications. They determine the nature of the relationship of the household with other subjects, as well as the form of inclusion of its individual members in communities of another level (community, class, shop organization, etc.). Predominantly subsistence economy also forms a special character of internal relationships. The well-being of a traditional household depends on the productivity of its members. The possibilities of increasing the productivity of domestic labor due to the growth of its armament in such a household are limited due to the small volumes of production and the created surplus product. Therefore, the main source of its growth is the increase in the return of the labor factor, which is based on the division of labor, its specialization.

In a traditional household, the division of labor is largely gender and age in nature.. The distribution and consolidation of functions between specific persons, taking into account their gender, age and skills, is usually carried out by a strong-willed decision of the head of such a community (the head of the family). Due to the inertia of the technologies used, the composition of functions and the principles of their distribution among members of a traditional household turn out to be stable over long time intervals and acquire a familiar form. Within the framework of such an organization of economic activity, the upbringing of the younger generation, taking into account the presumptive nature of future occupations, becomes an integral feature of the traditional household.

The division of labor involves the coordination of the actions of the members of the household. The effectiveness of the coordination function is the most important factor in the economic performance of a traditional household. The implementation of this function is based on the relationship of personal dependence, which, combined with a small number of household members, can effectively block their opportunistic aspirations and reduce internal costs. The degree of exclusive power of the head of the household in terms of organizing joint activities is determined by the tasks of its coordination. Accordingly, it depends on the size of the household, on the number of its members and the level of division of labor between them, on the role of domestic production in ensuring general welfare.

Household in an industrial economy loses closure. The dominance of internal economic relations is being replaced by the predominance of external ones. The household becomes an active participant in transactions with other economic agents, acting as an independent entity with a separate economic turnover of resources and a special role in the social division of labor and the circulation of resources..

The production function of the household is narrowing, its main function is increasingly becoming consumption. Increasingly, the household draws consumption resources from the external environment through exchange for income from the inclusion of its own resources in the economic turnover, primarily human capital. Thus, the well-being of the household becomes closely linked to cash receipts, and the budget becomes the main tool for its optimization.

Inclusion in the market environment also changes the nature of relations within the household. The lack of alternatives to the internal use of its resources, characteristic of the traditional household, is being replaced by a choice between their use within the household and outside it. This fact modifies the intra-family relations of the members of the household regarding the distribution and consolidation of the functions of its management between them. The performance of these functions by a particular person is viewed through the prism of his opportunity costs associated with the refusal to use his capabilities outside the household.

The transformation of the household into an element of the industrial economic system led to the isolation of the economic sphere of the life of the family community from the sphere of personal, emotional and spiritual relations of its members. There is a separation of the family from the household, and the private life of the individual also falls into two areas.

Being embedded in the market system, the household as a sphere of activity becomes dependent on the functioning of the economy, forced to adapt to its requirements, build its own activities in accordance with the laws of the market. A market-type household arises in which economic relations between members acquire dominant positions in comparison with other relations between them.

Such a household appears as a special contract system based on contracts between individuals who are independent in their choice - owners of mutually specific resources.. As such, this system implies the freedom to stay in and out of the household. It also has its own character of power relations. First, these relationships are not imposed by family traditions, but are conditioned by an agreement between members of the household. Secondly, the range of issues resolved on their basis is reduced. This is due to the narrowing of production activities as a factor in the welfare of the household, which reduces the severity of the problem of dividing economic functions between its members and coordinating their activities. Third, the absolute power of the head of the household is giving way to softer forms of decision-making. Collegiality in making significant decisions is becoming the norm, although its level may vary (ranging from consultative to collective options).

Glossary

Household budget - the system of education and use of the fund of its funds. The concept of the general budget does not imply the consolidation of all the resources of household members in it. In addition to contributions to the general family budget, each family member, as a rule, also has personal funds.

Head of household- a person with comparative advantages in relation to the rest (the highest social status, income level, leadership qualities, experience, etc.)

Household cash income- the amount of money that a household (family) has to cover its expenses.

Household- the economic form of the family, a group of people united by common tasks, place of residence, budget and usually family ties, combining income and property to meet their needs.

Household industrial economy- an independent subject of market relations with a separate economic turnover of resources and a special role in the social division of labor, which is formed as a system of contracts between individuals who are independent in their choice.

AND institutional economic unit– organizationally completed economic formation, isolated within the economic system, retaining functional certainty and being the center of independent decision-making.

Small social group– a relatively stable set of people who have common interests, values ​​and norms of behavior, united by joint activities and in direct interaction with each other.

Satisfaction model- a model of boundedly rational behavior, according to which, in the process of considering possible options for action, the household stops its choice on the first option that satisfies pre-set requirements.

Family - a group of people united by a community of family ties. This group does not necessarily live under the same roof and has a common budget and maintains a common household and life.

Traditional household type- a community of people (usually representatives of several generations belonging to the same family), based on common economic activities and common traditions.

Human capital- a set of knowledge, practical skills and experience of a person, realizing which, he creates elements of wealth.

Value-rational behavior- behavior performed by the subject under the influence of socially significant values, ideas, ideals, and beliefs shared by him.

Questions for self-examination

1. What is a small social group? What are the features of the family as a small social group?

2. Define family. How can families be distinguished?

3. What is a household? How are households and families related?

4. Why is the household a qualitatively special institutional economic unit?

5. Name and expand the most important functions of the household.

6. Describe the household as an economic organization. Why is it a special case of power relations?

7. Describe the place of the household in the economic system and the forms of its inclusion in the process of circulation of resources and income.

8. Why is the household as an economic entity characterized by boundedly rational behavior?

9. What is the specificity of boundedly rational behavior of households?

10. What is meant by the household budget? Describe the structure of his income and expenses.

11. What is the difference between a traditional household and an industrial stage household?

THEORY OF THE FIRM

Topic questions

1. The firm and the market are alternative types of institutional arrangements.

2. Firm as an organization. The contractual nature of the firm.

3. Ownership of the firm's resources.

4. Types of firms.

5. Organizational structure of the company.

Material for preparing for seminars

1. The firm and the market are alternative types of institutional
agreements

In neoclassical analysis, a firm is a certain abstraction that functions in conditions of perfect competition, forming its costs in such a way as to maximize the profit received. She never encounters incomplete information, incompetence of managers, various kinds of risks and other factors that take place in reality. Out of the field of view of the neoclassicists were questions about the nature of the firm, its internal organization, whether the firm complements the market or replaces it, and many others.

Meanwhile, the volume of transactions performed within firms is of the same order of magnitude as the volume of transactions carried out in the market. Large companies are huge property complexes with thousands of participants. This circumstance alone requires more attention to non-market ways of organizing transactions.

There are two main ways of organizing production: market and intra-company. The market method of organization assumes that the owners of the resources necessary for the production of the product conclude bilateral contracts between themselves, ensuring the promotion of the product through the stages of its manufacture.. The advantage of this method is that in case of failure to fulfill their obligations, the parties will incur certain costs. Intra-company organization of production involves the creation hierarchical structure - firms. A certain person combines all resources into a production complex, entering into a special relationship with their owners.

Each of the methods is associated with certain costs. The market way of organizing involves a long search for a partner, as well as negotiations and attempts to agree on a price. In this case, unforeseen circumstances may arise, which, ultimately, can lead to a significant increase in the costs of negotiating associated with the adaptation of the contract. The second way is associated with the costs of coordinating activities within the firm and the costs of monitoring and motivating employees. The concentration of power in one hand increases the costs associated with errors in making managerial decisions and leads to administrative inflexibility.

The similarity of both modes of organization lies in the fact that both intra-firm organization and market organization rest on contracts. However, there is also a fundamental difference. In market transactions, one of the parties in exchange for payment receives from the other a product of varying degrees of readiness. Under contracts that ensure the concentration of resources within the production complex of the company, the owner of the company acquires the right to tell the owners of these resources what, when and how they should do. Thereby, The firm is a structure for managing contractual relations, within which the price mechanism is supplanted by administrative regulation and the coordination of the activities of individuals is carried out through teams.

Institutional economics views the firm as one of two alternative forms of resource pooling. needed to get a certain result. Such an understanding requires an answer to the question of the reasons for the existence of the firm, its displacement of decentralized market exchange.

In institutional theory, the substantiation of the fact that a firm replaces the market is linked to various objective reasons. One of them is the problem of risk and the need to take it into account in economic activity. In conditions when participants in economic interactions show different attitudes towards risk, the firm is considered as an institution that ensures its distribution. Risk-averse subjects become employees of the firm, who are paid a relatively stable salary by the owner of the firm. Thus, they evade the risk associated with changes in the economic situation, it is assumed by the owner. In exchange for insurance against risk, employees allow the owner of the firm to give instructions and exercise control over them.

As another objective reason for the emergence of the firm as an alternative to the market mechanism, institutional theory considers savings on transaction costs. According to this approach, intra-company coordination of activities replaces market coordination if it brings savings in interaction costs. Such savings arise as the specificity of market exchanges increases, which makes market coordination more expensive. At a certain level of specificity, the transaction costs of using the price mechanism turn out to be higher than the costs of coordinating actions based on power relations.

The hierarchical management structure of the firm allows minimizing transaction costs by reducing the number of contracts required to implement the production function. Besides, when a market organization is changed by an intracompany one, there is a transition from short-term to long-term contracts between the owners of production resources, which helps to reduce the uncertainty factor in the future and the associated costs. Long-term intra-company relationships help to minimize information asymmetry.

The process of substitution of intra-company organization for decentralized market exchange has its quantitative limits. The firm as a structure for organizing interactions is not able to concentrate any volume of transactions. I.e, firm size is limited . There are a number of reasons for this.

First, as the number of transactions within the firm increases, so do the costs of intra-firm organization, which leads to a reduction in the income of the entrepreneur. At the same time, the growth of costs is at a faster pace than the growth in the number of transactions.

Secondly, with an increase in the number of intra-company transactions, it becomes more difficult to make optimal management decisions. Upon reaching a certain size of the firm, the marginal return of the managerial resource begins to decline, causing a decrease in the efficiency of the factors of production used by the firm. In institutional economics, this phenomenon is interpreted as "decreasing marginal efficiency of management."

Thirdly, as the firm grows, the discrepancy between the interests of the entrepreneur and the owners of resources becomes more and more widespread, each of which pursues its own goals and is focused on maximizing its own utility. This contributes to the growth of opportunistic aspirations and the deepening of the "principal-agent" problem. As the firm grows, it becomes more and more expensive to resist such aspirations.

The size of the firm is specific to each area of ​​economic activity and the state of the environment of this activity.. In each particular case, it is determined by the ratio of the transaction costs of a market organization and the costs of centralized control that arise within the firm. The optimal size of the firm corresponds to a situation in which its further growth ceases to provide savings on transaction costs. Those. firm size reaches its optimum at the point where the marginal cost of organizing exchange within the market mechanism equals the marginal cost of organizing exchange within the firm. This optimum is not given once and for all. It changes with scientific and technological progress due to the emergence of innovations that contribute to cost savings for both market and intra-company organizations.

Similar information.

A family, or more generally a household, in a market economy is an economic unit consisting of one or more persons that independently makes decisions, strives to maximize the satisfaction of its needs, giving them certain preferences, is the owner of a factor of production (most often a worker). forces), ensures the production and reproduction of “human capital”,

A family is, as a rule, a small group of people consciously organized on the basis of family ties and common life, whose life activity is aimed at realizing the social, economic and spiritual needs of the individual, the family itself and society as a whole.

In any known society - ancient, primitive, developing or advanced - the family has always been the main force in the production and distribution of goods and services. It was especially important in production, in the care and education of children, in the production of food, protection from disease and other risks, as a guarantor of the reputation of its members. Moreover, parents often made self-sacrifice for the sake of children and each other, which testifies to the heroic nature of men and women.

The family has changed drastically over the centuries. The extensive family relationships in primitive society identified by anthropologists contrast with the nuclear (parents and children) family of modern society, where cousins ​​barely know each other. The obligation to care for and support old parents is largely absent in today's society, where old people live alone or in nursing homes.

The family still occupies much less space in economic analysis than in real life. And although prominent economists proclaimed the family the basis of economic life, neither in A. Marshall's Principles of Economics, nor in J. Mill's Principles of Political Economy, nor in “ Wealth of Nations” by A. Smith, no other great work has paid any significant attention to the functioning of the family.

The exception was the model of population growth by T. Malthus, which affected the relationship between fertility, family income, marriageable age. T. Malthus argued that under less favorable economic circumstances, spouses usually marry later (or should do so). However, this important observation was neglected by economists for many years. A serious contribution to the study of the emergence and development of the family was made by the work of F. Engels “The Origin of the Family, Private Property and the State” (1884),

Today, the family is considered to be the foundation on which the social order is based. But it remains one of the least studied institutions, despite the fact that for the last 40 years economists have been trying to systematically analyze the economic behavior of the family and its members.

When studying the economy of the family and household, we will consider the family as a kind of “firm” that consumes resources, including labor within the family and goods on the market, produces goods to meet its needs, and incurs certain costs.

In real life, there are also single families, consisting of single (single) men and women, independently, separately leading their households.

The family is influenced by economic, legal, ideological, moral relations. Traditionally, the family begins with marriage. Marriages, one might say, are made in a "market" that "destines" men and women for each other or leaves them alone until better opportunities arise.

In all societies, spouses tend to come from families of the same level, religion, and are matched by similarity in education, height, age, and many other variables. Destination theory in efficient markets explains positive matching by concomitance or “super complementarity” in the household between the properties of husbands and wives. Efficient predestination also partially explains the mutual altruism of wives and husbands: “in love” people probably marry because, at a separate level of formal analysis, love can be considered one of the sources of “companionship”

Marriage can be defined in many ways, but in Western economic literature marriage is sometimes seen as a legally binding contract between a man and a woman. Each party explicitly or implicitly assumes certain obligations within the family, recognizing certain rights and privileges of each other and explicitly or implicitly agreeing to the decision rules enshrined in the contract. Perhaps the main purpose of dates and engagements is really to give couples a chance to work out rules and develop a contract that everyone agrees to live by. (Not all couples, however, use this chance equally.) The contract, for example, may include provisions about children (and their number), who will do the housework and mow the lawn, what decisions will be made democratically by the whole family and which ones are to be determined administratively. Although one would like to think that everything in marriage should depend on love ... Without the development of such provisions or with their uncertainty in the future, significant disagreements may arise that will end in divorce.

The role of the court in the divorce process is important and also has economic implications. The intervention of the court guarantees the husband and wife some ownership of the family assets, tangible and intangible. Under these conditions, the husband and wife are interested in investing their time and other resources in developing family assets and building strong material relationships. The family is an investment project in the sense of getting a return in a number of years.

Costs and benefits of marriage

Human behavior regarding marriage is rational. This, of course, means that by choosing a spouse, both sexes maximize their utilities. It also means that in the process of getting married, each individual must ask himself two fundamental questions:

♦ what are the overall costs and benefits of marriage compared to single life;

♦ How long and hard should he or she look for the right partner, given these costs and benefits?

In weighing the pros and cons, the individual must reckon with several important considerations regarding the costs of marriage. The most important thing for many is the loss (price) of independence. People are never completely free to do what they want: they must consider the impact of their actions on others. In the family, the effect of the actions of individuals may be more direct and significant. Therefore, everyone needs to limit their own behavior to a greater extent than would be required if they lived separately.

The family usually agrees to make many decisions democratically and collectively. Family members are generally prepared for future costs, including the complexity and length of the decision. This is because agreement is more difficult to reach with a larger number of participants. For example, it is more difficult for a married Serezha to buy a new car than for a single Peter. All that Peter needs when buying a car is to take into account his desires. Seryozha must take into account not only his own preferences, but also the opinion of his wife. As a result, the process of buying a car for Serezha can be (and almost always is) longer. If husband and wife had identical preferences; which, no doubt, is extremely rare in marriage, the costs of their decision would be the same as Peter's. Thanks to the same preferences, they both could be sure that whatever one bought, the other would like it.

Because of these costs, spouses often agree to make most decisions administratively by one party. For example, one is given the right to handle family meals without consulting other family members. The other may buy children's clothes, etc. Each side has the right to make decisions without the consent of the others, and cost savings can generate a lot of profit that more than pays for bad decisions. The division of power in decision-making within the family makes the family economy efficient.

The family is involved in the production of goods and services that are shared among all its members. These things are available in the same quantity and quality to everyone. General commodities - to take the example of the automobile - may not entirely suit the tastes of any one individual, but they are commodities that everyone is willing to buy. In such cases, and there are many of them, the individual has to bear the costs of not receiving the goods in the quantity and quality that most fully satisfies his preferences.

Because family decisions are made democratically, family members should have a say in the distribution of the burden of producing wealth when determining who contributes income, time, or effort to the common treasury. The family can tax its members like any collective governing body. Any family member can be forced to pay for collective benefits and projects with which he does not agree. This can be considered a potential cost to a family member, as evidenced by the sometimes objections of those who do not want to do this or that job.

Other costs associated with marriage include the risk of growing strong emotional ties with a group of individuals and forgoing the opportunity to meet and socialize with other people. The cost of marrying one person can be seen as forfeiting the opportunity to marry someone else who might be the desired couple. but did not meet on time. The list of costs can go on.

According to Marxist theory, the costs in the family as the main consumer link in the economic system can be characterized as the costs of consumption (i.e., costs in the sphere of consumption). These costs can be of a productive nature (cooking, sewing clothes, repairing a home, etc.), so they are essentially consumption costs of production. In addition to the net costs of consumption when using housing, clothing, etc., the family incurs costs for the purchase of goods and services, which are already distribution costs in the sphere of consumption. Consequently, the costs in the family economy are diverse not only in terms of types, but also in terms of economic content.

The benefits of marriage and the family stem primarily from its ability to produce desired goods and services.

First, spouses have the ability to produce things that are impossible in an extramarital situation. This list may include children (at least legitimate), prestige and status, which can affect employment and circle of friends, the solidity of the company, always available family sex and family life in general. Without a doubt, many of these goods can be had in a certain quality and quantity outside the family; we only assume that within the family they acquire certain properties and are therefore valuable to people (although some of them can be considered costs).

Second, a family functioning as a separate household with more than one individual can produce goods and services much more efficiently than several households with one individual each. This is due to economies of scale.

Many goods and services for family members in the home are public goods: they benefit everyone and do not decrease in quantity and quality when additional consumers are added (for example, decorative items for the home, a beautiful picture on the wall, etc.), in people, living under the same roof, there is no need to produce common goods for everyone, so there is an opportunity to improve the quality of existing goods or direct resources to other purposes.

The efficiency of home production can be higher with specialization and exchange between partners. Parties can take advantage of their comparative effective performance. Assume for simplicity that the household produces only two services - cleaning the house and mowing the lawn (Table 8.1).

Table 8.1

Spouses	House cleaning, min	Lawn mowing, min
Wife	60
Husband	100	300

Tab. 8.1 shows that if these people lived separately, then it would take them a total of 560 minutes to complete this work. When they live together and each clean half the house and mow half the lawn, it takes 280 minutes (80 minutes to clean the house and 200 minutes to mow the lawn). However, both have the possibility of specialization: one cleans the house, the other mows the lawn. Since each will do something for the other, it is in a certain sense an exchange. Every time a wife cleans the house, she refuses 3/5 mowing the lawn: if she spends 60 minutes cleaning the house, then at that time she can no longer mow the lawn. Therefore, we say that the wife could mow 3/5 of the lawn during this time. On the other hand, every time a husband cleans the house, he refuses to mow only 1/3 of the lawn. Thus, for the wife, cleaning the house will be more expensive in terms of the unmowed lawn. If we want to minimize production costs, then the wife should mow the lawn, and the husband should clean the house. With this division, the total time will be equal to 200 minutes. If the wife cleans the house and the husband mows the lawn, it will take 360 ​​minutes.

We can conclude that under a common roof, the cost of producing goods is minimized if the spouses specialize effectively. Note also that in our example, the wife is more productive in both services. By specializing, husband and wife can avoid the costs of developing the same skills. Everyone can focus on limited household tasks, improving their performance. Husband and wife are interested in maximizing domestic production or minimizing its costs, which is the same thing.

If the family has to make a decision about the distribution of the time of its members between external work and work at home, less expensive outside labor should be used to minimize costs. The cost of cleaning a house is equal to the cost of materials and the cost of the individual cleaning time of a family member outside the family. Let's say cleaning takes 2 hours. The salary that a wife can earn outside the home is 6 dollars per hour, the husband's salary is $10 per hour. It follows that it is cheaper for the wife to do the cleaning. If the husband cleans the house, it will cost $8 more.

It is known that women tend to earn less than men due to discrimination and less productivity. Individual households have to put up with this, so many responsibilities (childcare, etc.) are transferred to wives in the family. At the same time, the costs of childcare are minimized, and the household product is maximized.

It should be noted that the level of employment of women has been growing over the past decades, while the level of employment of men in social production has been declining. There are many reasons for this, including changes in society's attitude towards women's employment.

Responsibilities are usually delegated to family members, and everyone in the family is dependent on others to fulfill the terms of the contract. The well-being of the family will decrease if one of the family members shirks his duties. Slacking from household chores is detrimental to others.

Almost all contracts require monitoring of execution. The marriage contract is no exception here, especially legally and emotionally. The feeling of love reduces the cost to each spouse of verifying compliance with the marriage contract. Where there is no love, evasion of family responsibilities is more likely, which diverts family resources to “supervision” of family members. This is where love takes on economic meaning.

An effective marriage is one in which two people love and are similar to each other in values ​​and preferences. This conclusion follows from the position of economic theory about the family as a production unit. The stronger the love and the closer the views of the couple, the closer the marriage is to the ideal. However, in the real world, an individual often has to choose between a person less loved, but in many ways similar to him, and loved, but completely different.

Although love increases the efficiency of the household, marriages are known in which the parties dearly loved each other, but parted because the differences in tastes were so great that love could not overcome them. On the other hand, marriages without great love persist when the tastes of the partners are very close, the spouses find their relationship advantageous compared to other opportunities.

Economic role of family and household

The economic role of the family in market relations is extremely complex. The family solves various problems of housekeeping, family business, reproduction of the labor force, ensuring the necessary level of consumer demand, creating investment potential, and others.

In different historical epochs, depending on the nature of social relations, the family also changed: its place and role, size and stability, position in society, its socio-economic status.

The socio-economic status of the family is an integral indicator that reflects in family relations the features of the socio-political structure of the state, its legal foundations, the level of development of the economy, culture and public consciousness.

The value of the family, its role in a market economy can be represented schematically (Fig. 8.2).

Rice. 8.2. The role of the family in a market economy

The outer contour, formed by arrows, characterizes the movement of income and expenses of households and firms in monetary form. The inner contour shows the movement of goods, services and resources. The scheme (Fig. 8.2) indicates that the total value of sales of firms is equal to the total value of household income, the total value of payments in the upper and lower parts of the external contour is the same. Moreover, the equality of income and expenditure refers to the economy as a whole, and not to an individual household. Households supply the market economy with factors of production (labor, capital, land, entrepreneurial ability), supply them to the resource market and use the money received for them (cash income) to purchase goods and services (consumer spending) to meet their needs. The family in this scheme is at the center of a market economy, determines, to one degree or another, the functioning of households and firms, resource markets, goods and services. Being included in the cycle of the market economy, the family performs a variety of functions.

Family Functions

The functions of the family are varied. They affect all the most important sectors of society and largely determine the socio-economic processes taking place in it.

In a market economy, the family is the main link in the formation and accumulation of human capital.

The functions of the family at all stages of the formation and functioning of "human capital" are interrelated. For example, a decrease in the childbearing function reduces the labor potential of the family, weakens its production capabilities and may adversely affect the educational role.

All functions have a targeted focus on the accumulation and reimbursement of costs associated with the creation of “human capital” and the development of entrepreneurial potential (Fig. 8.3).

Rice. 8.3. Functions of the family in the formation of human capital

Let's take a closer look at the reproductive function. According to modern Western economic theory, children are economic goods. Providing their parents and relatives with significant benefits, they are the result of a constantly evolving process of production, including the expenditure of resources. From an economic point of view, children are both a source of consumption and an object of investment.

Parents get good company in their children, with benefits that are different from those of other commodities. Children can talk, walk, they can be partners in table tennis or checkers. Their existence gives parents some hope of not being lonely in old age. Children can please their parents with feelings of respect, need, and adoration.

Rightly or wrongly, children are used to fulfill the goals of their parents. A couple's motivations for having children may include a genuine need to contribute to society, a desire to discover the unknown, or to test the hypothesis that they are better than others in raising children. In every respect, children are consumer goods.

Children were once in history (and this is still true in the underdeveloped countries of the world) a means of securing their parents' pension in old age. While the children were growing up, the parents contributed to their pension fund by feeding and clothing their children; in later years, children took care of their parents if they were unable to provide for themselves.

This type of home insurance organization has not completely disappeared. Today, however, people in developed countries rely more on cash-based, financially sound retirement income plans for old age.

Last but not least, children can be an important source of labor, especially in families living on farms or in places where child labor is cheaper than mechanization. When children are old enough to work, parents reap the rewards of their investment. The benefits of having children and the aggregate level of parental satisfaction determine parental demand for children. This demand for children, or more specifically for “children's services”, may affect the total number of children or the quality of children born and raised.

The costs of raising children include the family's costs of birth, food, clothing, shelter, education, entertainment, medical expenses, insurance, transportation, etc. Other cost items that are often overlooked are the emotional costs and parental time spent raising children. Estimating the cost of children is a difficult problem. The actual cost of raising children will depend on how much the parents are willing to spend, and all costs will vary with the parents' economic status and where they live. Taking into account these problems, an assessment was made of the costs typical for the United States in the late 80s. 20th century This includes the cost of giving birth (hospital and doctor's fees of approximately $3,000), the cost of raising children under 18 ($65,000 - $300 per month), the cost of educating at a public college or university ($24,000 - $6,000). , per year) and parental alternative time devoted to raising children ($374,400 - $20 per hour for 20 hours a week for 18 years). The total cost of $466,400 is likely significantly higher than expected, primarily due to the inclusion of the opportunity cost of parenting time.

The total cost for children will vary considerably depending on the parent's alternative salary. The cost per child for a low-income person can be much lower. Assuming all costs except wages remain the same, then the cost of a poor child earning $5 an hour would fall to $185,600.

The total costs may be lower than in the above calculation because many of them will be spread over a number of years. A thousand dollars spent a few years ago is worth less than a thousand dollars spent today. The reason is that a thousand dollars spent today “earns” interest over a number of years if it is deposited in an account or invested in interest-bearing securities. Of course, even after discounting the cost of future expenses, the first child is the most expensive piece of “goods” that people are likely to buy in a lifetime! What is remarkable about the family is that many of the costs associated with the first child are constant, that is, they do not change with the birth of subsequent children. This means that the marginal cost of the second child is usually less than the marginal cost of the first.

Children are a special economic good, because they bring much more emotions, risk and uncertainty than the purchase of any product. Parents cannot see the benefit (of the child) prior to purchase; indeed, their task is to produce a child “from scratch”. The child is born with his own desires, which reinforces the element of uncertainty. In the case of a commodity, the buyer may later sell it, recovering at least some of his investment. In modern society, doing the same with children is not accepted. Thus, the decision to have a child is more difficult than other family decisions, and there is more room for error in producing children than in producing anything else. However, this does not mean that parents will not try to approach the problem from a rational position.

Parents calculate the costs and benefits in making decisions about children. In this case, the demand function for children will be descending. The cost of children will affect the birth rate. More children - lower cost or price. Parents, in addition, rationally balance the number of children with their quality.

Rice. 8.4. Aggregate market demand for children

Rice. 8.5. Reduced demand for children

Figure 8.4 illustrates the total market demand for children (D). Q 1 - children who will be born and raised impulsively, that is, due to the irrational behavior of some of the parents. However, the number of children also depends on supply, that is, on the cost of producing children. If, for simplicity, the position of children is assumed to be horizontal (*?), i.e., marginal costs are constant and equal to P jt, the total number of children will be equal to Q 2 ,. Q 1 is the result of “accidents”, then Q 1 -Q 2 is the result of “cost-benefit” calculations.

Interestingly enough, many accidental births could have been planned for a later date. In this case, the demand curve shifts to the left (the argument does not change).

If the demand for children falls, an economist can predict a decline in the number of children available. This situation is shown in Fig. 8.5 shift in demand from D j to D r The number of children will fall from Q 2 to Q r The number of children born by chance will remain Q f However, the number of rationally determined children decreases, causing a decrease in demand as a whole.

Such a change in demand may be the result of an external fall in "taste" for children. It may also stem from a decline in the relative price of other goods produced and consumed at home. If the latter occurs, rational couples will seek to reallocate their resources from children to cheap goods. The rise in the relative cheapness of goods such as cars and all kinds of entertainment that can be substitutes for children explains the decline in fertility.

In general, the location of the demand curve depends on the relative benefits associated with children and family resources. Children raised on farms have more opportunities to contribute to family income than urban children. One explanation for this may be the child labor law, which allows child labor on farms and restricts it in industry.

For this reason alone, economists can expect more benefits from, and greater demand for, children in farm families than in urban families (D 2) (figure 8.5). As a result, farmer families are larger. If there is migration from villages to cities, as in recent decades in developed countries, a drop in the birth rate and a decrease in population growth should be expected.

Over time, with a decrease in the price of mechanical equipment, ceteris paribus, it is possible to reduce the number of farmers' families if the equipment can replace the labor of children. Cheaper agricultural equipment will encourage families to buy it and use less labor, i.e. have fewer children.

In addition, preferences can turn from quantity to quality, causing a shift in the demand curve based on quantity = Parents are always faced with the choice between allocating resources to more children and giving more attention to existing children.

According to our model, anything that reduces the cost of children shifts the supply curve down and increases the number of children. In this case, in Figure 8.6, supply moves from S 1 to S 2 and the number of children from Q 2 to Q r Cause growth is that the costs of additional children Q 2 and Q 3 exceed the benefits indicated by the demand curve between Q 2 and Q r When the supply curve shifts downward, the benefits of additional children begin to exceed the costs of them. Thus, it becomes more rational to transfer more resources to the production of children.

Rice. 8.6. Demand curve with reduced costs for children

Such a change may be the result of an increase in the efficiency of raising children, making the whole process less expensive, a decrease in the market prices of the resources necessary for the production of children, or the result of changes in external factors such as government policy, inflation, wages, the level of education of parents, etc.

The level of education of parents can affect the production of children in different ways.

First, he can change the relative preferences of the parents, offering instead of the children other things that are more valuable to them.

Second --■ Education can increase the parent's alternative salary level and create a positive income effect and a negative cost effect.

The third ~~ education can increase efficiency, which will raise the quality of children. At least one empirical study supports this idea. Even at a higher alternative wage, greater efficiency allows an educated person to obtain a child quality unit at a lower cost. For example, it takes a parent with primary education 2 hours to teach something useful to their child (quality). His salary in the market is $4 an hour. The total cost is $8. On the other hand, if you take a more educated parent who earns $20 an hour, achieves the same result with his child in 15 minutes, the cost will be only $5. Other things being equal, you can expect more demand for quality children from more educated parents.

Fourth, the effect of parental education can be manifested in the reduction of the body of unwanted children. Parents are altruistic (disinterested) towards their children. Altruism means that usefulness to parents depends on the usefulness of children:

U = U(Z . U 1 ... U),

where Z d is the parents' consumption, and O, (r = 1, ..., N) is the utility of the i-th child.

The function of socialization means the inclusion of a person in the social system through education, services in the field of health, education of children, culture, etc. with the help of the state. This is manifested in the variety of social services to the population in a market economy. These services include: employment measures, unemployment insurance, educational assistance, social assistance, labor protection for women and minors, child support, rental subsidy, pension insurance, social housing, accident insurance.

At the present stage of development of society, the importance of the recreational function is increasing, since a person who works intensively, primarily mentally, should have more opportunities to restore working capacity, to connect with the environment. The word “recreation” of Latin origin means rest, restoration of a person’s strength expended in the labor process. An analysis of family spending on leisure, travel, and spending free time indicates their growth and, accordingly, a change in individual preferences.

Housekeeping is a form of productive activity of the family. The household creates services and products designed to meet the needs of the family. The systematic production of products in the household for sale or the sale of services on the market characterizes a family engaged in individual labor activity, and the production of agricultural products is a personal subsidiary plot with a commodity orientation.

The household still consumes a significant part of the family members' time budget. Household work, a significant proportion of which is carried out by women, is very laborious and involves considerable physical effort. According to special surveys, hanging laundry costs more than equal work on a tractor, wiping windows more than driving a taxi, and ironing clothes in an hour burns as many calories as a bricklayer burns in the same period. All this determines the importance of the development of the system of personal services and the mechanization of the household.

Cooking is a special area of ​​productive labor in the family, absorbing a significant part of the time budget. According to surveys conducted in Russia, it takes 5 hours and 17 minutes for men to provide food at home (shopping food, cooking, washing dishes) and 16 hours 22 minutes for women, i.e. 36 and 57% of the total time, respectively. for housekeeping.

Important functions of the family include: organizing a family business, individual activities of family members, corporate forms of family participation in the market economy, etc.

Family budget

Creating normal conditions for the production of the human factor requires the formation and effective use of the family budget.

The family budget is divided into two parts: income and expenses.

Income includes:

♦ salary;

♦ business income;

♦ property income (rent, interest, rental payments, dividends);

♦ state transfer payments (pensions, scholarships, allowances, free services in the field of healthcare, education);

♦ income from other sources (inheritance, etc.).

Family budget expenses consist of the following items:

♦ social insurance;

♦ taxes;

♦ food and flavor products;

♦ clothing and footwear;

♦ rent;

♦ electricity;

♦ furniture, household appliances;

♦ transport;

♦ industrial goods;

♦ education, entertainment;

♦ leisure, travel;

♦ voluntary donations and contributions to public organizations;

♦ other expenses;

♦ savings (savings).

Among the incomes of the population, the largest share in most families is wages and entrepreneurial income, although they vary greatly in individual families. As a rule, it is these items of income that determine the well-being of the family. But not only.

Property income is essential. According to the professor of the University of Paris A. Babo, in the early 90s, XX century. the total amount of property owned by French families is estimated at 15-16 trillion francs, which is about 4 times the amount of national income. This indicates a rather high level of well-being of French families. On average, there are about 300 thousand francs of property per capita. In the dynamics of the property structure of families in developed countries, there is a tendency towards an increase in the share of financial components of property (cash, securities, savings deposits, savings in life insurance funds, etc.).

At present, the process of transferring property by inheritance plays a lesser role in the formation of initial property than it was noted before. And this means that young families should, by their own efforts, strive to increase their well-being.

Among the expenses of paramount importance are the costs of food, which in our country in families with incomes below the minimum level range from 60 to 90%, in families with an average income - 42%, in highly paid families - ■ 28-29%. In the USA - 25.4%; in Western Europe - 20%; Japan - 25-30%. While in highly developed countries there is a tendency to reduce the share of this type of expenditure, in our country the opposite trend is in effect.

To characterize an economic entity, you need to indicate:

source and amount of his income

direction and amount of its expenses

Household is property, money, tools used by people at home. It covers the economic processes taking place in the place of life of people, families.

Household income is private income. They are formed by:

wages

owner's profit

capital

interest and dividend

participation in a joint-stock company

natural resources (land)

Each household's income is spent in three ways:

payment of taxes to the state

satisfaction of personal needs

formation of personal savings

Savings is the after-tax non-consumable portion of the annual personal

household income. There are the following types of savings:

home (in cash)

institutional (bank deposits, insurance policies, bonds, shares, etc.):

• a) "protective" - ​​actions to preserve the original purchasing power of a given amount of money. They perform the role of self-insurance against unpredictable circumstances.
• b) "speculative" - ​​actions to multiply the purchasing power of a given amount of money. They play the role of a kind of "family business" according to the rules of a market economy.

In general, savings is a deferred demand for real goods (goods and services), and this "deferred" turns savings into a permanent "sword of Damocles" hanging over the market economy, i.e.:

a relative increase in savings (as personal income rises) means a relative decrease in demand for consumer goods and services, which can cause a reduction in the production of these goods and an increase in unemployment (unemployment)

the excess of "home" savings can undermine the country's economy, so it is necessary to stimulate institutional savings, i.e. participation of money in the circulation (economy) of the country

Consumer spending is that part of personal income that irrevocably and without interest goes to producers.

And among the objects of consumer spending can be identified:

non-durable goods (term - less than a year)

durable goods (term - more than a year)

The household is one of the most important market institutions. The role of households in the development of market relations is relatively large and is determined by the following points:

First, households provide the necessary level of consumer demand, without which the functioning of the market mechanism is impossible.

Secondly, household savings are a source of savings and investment, which is very important in a developing economy.

Thirdly, households are the subjects of supply in the market for factors of production (entrepreneurial ability and labor).

Fourthly, it is the household that is the basis for the formation of production and the implementation of human capital.

Fifth, the ability of households to establish a family business contributes not only to the growth of personal well-being, but also to the development of a market economy as a whole.

We know that one of the subjects of the market economy is the household, which mainly represents the natural sector of the modern economy. Along with firms and the state, it is an economic unit consisting of one or more individuals who make financial decisions and supply the economy with inputs of production. The funds received for the resources are used to purchase goods and services that satisfy the immediate material, spiritual and social needs of a person. Thus, households are organized entities that conduct economic activities to meet needs.

In a real (market) economy, the entire mass of resources makes up the aggregate resource market, which, in turn, consists of a multitude of markets for specific resources. The owners of these resources are considered mainly households. In cases where the owners of resources are firms or the state, the latter act as independent owners of resources, i.e. like households. All types of payment for factor resources in an ordinary economic situation act as generalizing terms of income or profit.

As you know, the subjects of the market are sellers and buyers. Households, firms (enterprises, businesses), the state (government) act as sellers and buyers. Households (consisting of one or more persons), on the one hand, are buyers of goods and services, on the other hand, they have at their disposal factors of production (labor, land, which they can sell or rent). They can own shares, thanks to which they also become owners of the means of production (capital). In addition, households act as buyers in the market for goods and services provided by firms and state enterprises. At the same time, they themselves are sellers in the resource market. The income received from the sale of factors of production (primarily labor) is used to meet personal needs.

Firms, having money capital at their disposal, acquire from households the factors of production they need in the resource market and use them to produce goods and services. Their main goal is to make a profit. The goods and services produced by them are sold by firms to households in the market for goods and services, using the income received to expand production activities.

The state also participates in the circular flow model, which provides households and firms with its services through the country's national defense system, education and medical care, etc. To ensure the production of these services, the state collects money from households and firms in the form of taxes. From them, the state buys the resources, goods and services necessary for its business activity.

In addition to providing services, the state provides various cash payments to firms and households. It is mainly about transfer payments. An important part of transfer payments is state cash payments for social needs - pensions, benefits and other types of assistance to the disabled, unemployed and other low-income strata of the population. The second direction of transfer payments is grants and subsidies (cash payments provided by the state to firms to encourage the production of certain goods and services). Subsidies and grants can be provided both to producers of goods and services and their consumers, including households.

The circuit model clearly illustrates the relationship of all participants in market activity. They are interested in each other, the well-being of one market participant depends on the well-being of others. Even the same market entity can be part of a household, a state institution, or a business participant. For example, while employed by a government official, he is a representative of a government organization; owning the securities of a corporation, he represents the business; spending his income for personal consumption, he is a member of the household.

All participants in market relations are real owners and have their own economic interests, which may coincide or conflict with the interests of other entities. Households try to satisfy their wants and needs as much as possible; firms - to get the maximum profit, the state - to achieve the maximum welfare of society. Each of them occupies a certain place in the system of social division of labor and, in order to realize their economic interests, must offer what is necessary for other subjects - carriers of market relations.

Connections and sources of household income

The largest source of household income is wages, which in developed countries account for three-quarters of total income.

Households are directly involved, along with firms and the state, in the movement of resources, income and goods (see Table 1)

Table 1

Interaction of households with other market entities

Resource fee (income)

Transfer consumer payments goods and services

Taxes Farm cash income

Interest Savings Investments

Cash (loans)

The main subjects of a market economy are households, enterprises, the state.

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As an independent subject of market relations, a household is a group of individuals who make independent economic decisions. The concept of "household" is widely used in economics; the economic causes and regularities of the emergence of households are studied. There is an opinion that historically, households were the first economic entities, because in the process of development of productive forces, a situation arose more and more often when the benefit forced people to combine their property in order to implement large-scale entrepreneurial projects. Such agreements were unstable, but allowed to achieve greater profitability of projects. The initial form of association was marriage agreements between members of households. In this sense, the concept of "family" is secondary to the concept of "household".

In the economic literature, revealing the economic content and essence of the household, the authors, as a rule, put forward one or several features as the basis of their definitions: a joint household, a joint budget; joint property; general area of ​​residence; family relationships.

According to the recommendations of the United Nations, a household is "a person or group of persons united for the purpose of providing everything necessary for life", that is, united by joint housekeeping. In the scientific, educational and methodological literature we find other definitions.

The essence of households as subjects of market relations is manifested through their functions that they perform in the economic system of society. Chief among them: the supply of factors of production, consumption and savings.

The circuit in the economy begins with households (see fig.). First of all, households are providers of resources, such as services of the factor "labor", capital, land and entrepreneurial abilities, receiving income in cash or in kind. These resources go to enterprises, which, by combining them in a certain way, create goods and services. The latter, once in the relevant market, are bought by households. In a market environment, households and businesses act as both buyers and sellers at the same time.

Households can supply national production with the financial resources necessary for the organization of social production. They buy stocks in large industrial corporations and banks, put money in savings accounts, buy bonds.

The leading function of households, which creates conditions for effective demand and stimulates the growth in the production of goods and the provision of various services, is consumption. The level of consumption is determined by their total income, total consumer budget, housing and accumulated property.

Notes

1. Enterprises, using production resources, produce various material goods and services. The main objectives of the activities of enterprises in the market is to make a profit and achieve an acceptable yield.

The state is a set of public and social structures. There are a lot of such structures, but each of them is aimed at meeting public needs. To achieve its basic goal (acceptable satisfaction of social needs), the state, in particular, forms centralized funds of funds.

2. The household is one of the least studied economic units. This can be partly explained by the fact that economic relations at this level are closely related to social relations, and significantly depend on the psychological, historical and other factors that determine the economic activity of people. Recently, however, the attitude of researchers towards households as independent economic units has changed. Economists who considered households in their studies studied mainly its external relations: the impact on the national economy and the reverse impact of the national economy on households. However, extremely complex economic processes take place within the household itself. Modern economics believes that the production of goods and services is carried out within the household, but this production does not receive external economic evaluation.

3. The concept of "household" is used by some authors as a synonym for the concept of "family". This use is not entirely correct. Unlike a family, a household can be represented by one person, several families, or may include people who are not relatives.

4. In domestic textbooks and manuals on economic theory, political economy, we find the following definitions:

"The country's households are the totality of all private households whose activities are aimed at meeting their own needs. A household is understood as an economic entity consisting of one or more individuals who jointly carry out economic activities and have a common budget" (Fedorenko V.G. and others, Political Economy: A Textbook, K.: Alerta, 2008, p. 158).

"A household is a separate economic unit, consisting of one or a group of persons united by a place of residence and a common budget, which is the owner and supplier of resources to the economy and receives in return funds to acquire the necessary benefits in order to ensure its livelihoods" (Belyaev A.A. ., Bebelo AC Political Economy: Textbook - K.: KNEU, 2001.- P.139) /

"Household - a set of persons who live together in the same living quarters or part of it, provide themselves with everything necessary for life, maintain a common household, fully or partially combine and spend funds. These persons may be in family relations or relations of in-laws, not be in any of these relationships, or be both in those and in other relationships.A household may consist of one person: article 1 of the Law of Ukraine "On the All-Ukrainian Population Census" (Statistical Yearbook of Ukraine for 2009. - Kyiv: State Enterprise "Information and Analytical agency", 2010. - S. 392).

5. An interesting concept is that defines a household as a unit that has different types of strategies: the strategy of existence, social mobility, survival, migration. The household, according to this concept, operates within a dominant economic system that provides both opportunities and barriers for it. The following indicators are included in the analysis: productive work and the reproductive factor, the needs of family members and the level of income, the relationship between consumption and production, the dynamics of maximum profit.

There are other theories. Despite the differences in approaches, these theories consider the household through the prism of the interaction of several economic institutions: the labor market, the consumer goods market, the market for industrial goods, the financial market, and the like.

Three main subjects of the market economy:

Firms – State – households

The household - a subject of the economy, which consists of one individual leading an independent economy or, more often, a group of people living together and leading a common economy.

Signs:

- cohabitation and housekeeping

- separate budget

Possession of certain resources

Independence in making business decisions

Striving for maximum satisfaction of needs

Family- This is a group of people united by family ties and nothing more. A family can be a household if they live together and have a common budget.

Home economics (routine)- this is economic activity exclusively inside the house: cleaning, cooking, caring for children, etc. Household activities include, in addition to the home economy (housekeeping), market interaction with other economic entities.

Household types:

1. Territorial regional affiliation(regions, natural and climatic zones, etc.).

2. Labor potential(number of able-bodied, level of education, vocational training)

3. Demographic characteristics(family and non-family households, number of family members, gender and age characteristics), (Most in the Russian Federation - 94% -133 million people - family households).

4. Property characteristics and social status (income, nature and area of ​​housing, availability of a car, dacha, etc.)

Household income is the personal income of its members, which is formed from various sources: labor, social, secondary and other sources.

The expenses of each household are carried out in the following areas:

Purchase of food and services

Housing and communal expenses

· Paying taxes and social security

Expenses for education and recreation

Formation of savings (cash and market: banking, etc.)

79% - low-income households (less than 10,000 rubles / member)

Less than 1% (more than 100,000 rubles/member)

"Middle class" - 20% (from 10 to 100 thousand rubles / member)

Household functions:

- consumer– formation of consumer demand

- investment– savings -> investments -> economic growth

- entrepreneurial function- family business

- reproductive function– the reproduction of human capital and the supply in the market of factors of production, first of all, will undertake the abilities and labor force.

Formation of human capital (Provision of conditions for childbearing, primary socialization of children).

Preservation of human capital (Housekeeping, provision of recreational conditions).

Implementation of human capital (Ensuring family business, Ensuring individual economic participation).

Features of households in Soviet economy:

Relative equalization of household welfare

The shortage of goods and the dependence of consumer choice not so much on money income, but on the place in the party-state hierarchy

State monopoly in the field of employment, prohibition of private business activities

State paternalism and formal constitutional guarantees for work, education, etc., but in the case of "dissidence" - the rapid destruction of this household

Total control of state and quasi-public organizations (party committees, local committees, Komsomol organizations) over the personal life of households

New institutional conditions:

The emergence and development of institutions of private property and entrepreneurship

Formation of the financial market

Emergence of a saturated market for consumer services and goods

Instability of the institutional environment

Peculiarities contemporary Russian households:

The economic independence of households is increasing and their dependence on state patronage is decreasing

Diversification of employment of household members, the spread of double, triple and even secondary employment

Differentiation of households by income level and consumer behavior: demonstrative snobbish (ostentatious) consumption of the "rich" and PZHM-oriented majority of households

The home economy (routine) acquires more civilized features (modern household appliances, the use of new technologies, home security)

The main problem is an increase in personal income and a decrease in the number of low-income households.