Consumption (economics) facts for kids

Consumption is a big idea in economics, which is the study of how people use their money and resources. It's all about how people, called consumers, spend their income (the money they earn). When you buy things like food, clothes, or even a video game, you are consuming!

People spend their income on many things. Some of it goes to buying products (like a new phone or a book) and services (like getting a haircut or using the internet). This act of buying and using goods and services is what we call consumption. It's a very important part of how our economy works.

What is Consumption?

Consumption means using up goods and services. Think about it: every time you eat a snack, wear a T-shirt, or watch a movie, you are consuming. In economics, consumption is the final use of goods and services by people. It's different from businesses buying things to make other products.

Why Do We Consume?

People consume to meet their needs and wants. We need food, water, and shelter to live. We also want things that make our lives better or more fun, like toys, entertainment, or travel. Our choices about what to consume affect businesses, jobs, and the overall economy.

How Does Consumption Work?

Most people get money from their jobs or other sources; this is their income. They then decide how to use this income. A big part of it goes towards consumption. For example, if you earn money, you might spend some on a new pair of shoes, some on food, and some on a movie ticket. All these are acts of consumption.

The Role of Income

The amount of money people have, their income, usually affects how much they consume. If someone earns more money, they might buy more things or more expensive things. If their income is lower, they might have to be more careful about what they buy.

Saving vs. Spending

Sometimes, people don't spend all their income. They might choose to save some of it for the future. This saved money can be used later for big purchases, emergencies, or investments. The decision to spend or save is a key part of personal finance and economics.

Who Studies Consumption?

Many economists study consumption because it's so important to the economy. A famous economist named John Maynard Keynes talked a lot about consumer spending. He introduced the idea of a consumption function. This is a way to describe how much households (families and individuals) tend to spend based on their income.

Understanding the Consumption Function

The consumption function is a simple idea: it suggests that as people's income goes up, their spending on consumption also tends to go up, but not always by the same amount. For example, if you get an extra $10, you might spend $7 and save $3. Different economic thinkers have slightly different ways of explaining this, but they all agree that income plays a big role in how much people consume.

Consumption in Daily Life

Consumption is happening all around us, all the time. When you go to a shopping mall, you see many people consuming. They are buying clothes, electronics, food, and gifts. When you use electricity to charge your phone or turn on the lights, you are consuming energy. Even using public transport or going to school involves consuming services.

Types of Consumption

Consumption can be divided into different types:

• Durable goods: These are items that last a long time, like cars, refrigerators, or furniture.
• Non-durable goods: These are items that are used up quickly, like food, drinks, or cleaning supplies.
• Services: These are things people do for you, like a doctor's visit, a haircut, or internet access.

Understanding consumption helps us see how money moves through the economy and how people's choices affect businesses and jobs.

Images for kids

• 

  People buying home electronics at a shopping mall in Jakarta, Indonesia

• 

  Energy consumption per capita-Iran (Cro)

See also

In Spanish: Consumo para niños