Consumption and Savings

Consumption and Savings Producing means creating wealth and at the same time distributing income which makes it possible to acquire this wealth. These consist of consumer goods and capital goods. As for disposable income, it is defined as the share of income that remains available to households, once social benefits have been received and direct taxes and social contributions have been paid. This disposable income can be consumed or saved. To understand how the sharing of income between consumption and savings is determined, it is essential to take a theoretical detour (3rd section). But before tackling this aspect, it is important to start with a reminder of some basic notions (1st section) and then move on to the study of the microeconomic determinants of consumption and savings (2nd section). . IV- 1/ Some basic notions V-1-1 / The consumption V-1-1-1 / Definitions:consumption can be defined in two ways: ✔ Consuming is the act of using a good or service for individual or collective purposes. ✔ To consume is to immediately or gradually destroy a good or service in order to satisfy a need. Thereconsumptionis therefore motivated by the needs that an individual seeks to satisfy using a good or service intended for this purpose. Generally speaking, the economist designates consumption as the use of a good. It considers consumption as the main function of households. It is defined as the use of a good (we designate durable goods whose use is prolonged and non-durable goods which are destroyed upon first use) or a service which results in its more or less long term destruction. Consumption today most often involves an act of prior purchase, and therefore spending. A tiny part of what urban or rural dwellers consume in Tunisia today comes from their own production. V-1-1-1 / The different forms of consumption:Consumption is not a homogeneous function; it can be broken down according to a certain number of characteristics. We distinguish: ✔ Final consumption, which is solely the work of households, serves directly to satisfy a need. In household consumption, we differentiate between “final consumption expenditure” (what households pay) and “actual final consumption” (what households consume). ✔ Intermediate consumptionis the responsibility of businesses. It is all the goods and services consumed during the production process. That is to say destroyed or incorporated into a more complex product. The same good can be consumed intermediately or ultimately, depending on the use, productive or not, that its user makes of it. ✔ Individual consumption: the good or service consumed is carried out by a single individual. This involves the purchase of goods and services intended to directly satisfy individual needs. Individual consumption also includes self-consumption, that is to say the use of products that come from the family garden or the home one owns. Households mainly consume goods and services for their exclusive use. Part of their needs may not be satisfied directly by the market, which is incapable of providing them with the corresponding economic goods, hence resorting to another type of consumption called collective consumption.