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TYPE
Original Research
PAGE NO.
19-26
DOI
OPEN ACCESS
SUBMITED
14 March 2025
ACCEPTED
10 April 2025
PUBLISHED
12 May 2025
VOLUME
Vol.05 Issue05 2025
COPYRIGHT
© 2025 Original content from this work may be used under the terms
of the creative commons attributes 4.0 License.
Households as An
Independent Subject in
The System of Economic
Relations: Content and
Significance
Makhmudova Gulrukh Ravshanbekovna
Gulistan State University, Uzbekistan
Abstract:
This article studies households as one of the
main subjects in the economic system. The economic
activity of households, their role in market relations
and the distribution of resources are analyzed. Also, the
sources of income, consumption behavior of
households and their impact on socio-economic
stability in society are scientifically covered. The article
reveals the essence and functional tasks of households
in economic relations based on statistical data, practical
examples and existing scientific views.
Keywords:
Household, economic subject, income and
expenditure, market relations, economic activity,
consumption, economic system.
Introduction:
In the system of modern economic
relations, households occupy an important place as
independent economic entities. They actively
participate in economic processes as consumers of
goods and services, suppliers of labor resources, and in
some cases, producers. The actions of households in
obtaining, distributing and consuming income directly
affect the overall development of the national
economy. Therefore, a thorough study of their
economic essence, tasks and role in society is of urgent
importance. This article analyzes the specific
characteristics of households as economic entities,
their role and significance in the economic system.
Literature review
Households, as one of the main microeconomic entities
of the economy, have been studied in depth by many
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economists. In foreign literature, in particular, G.
Becker viewed households as decision-making units
and analyzed their economic behavior based on choice
and opportunity cost. Economists such as D. Nordin and
P. Samuelson have conducted research on the role of
households in consumption, savings, and resource
allocation. The World Bank (2022) report “Uzbekistan:
Pathways to Poverty Reduction and Inclusive Growth”
highlights the role of households in socio-economic
development in Uzbekistan and strategies to support
them.
This topic is also relevant in domestic research. D.T.
Yuldashev (2019) developed mechanisms for increasing
the economic activity of households through family
entrepreneurship in his study. B.K. Goyibnazarov (2018)
studied the financial stability of households through
statistical analysis of their income and expenses. Also,
in the textbook “Economic Security” published by O.
Sattorkulov and A. Abduvohidov (2019), households are
indicated as an important element of economic
stability.
Of foreign scientists, G. Becker assesses households as
an economic unit that makes decisions based on choice.
According to him, households influence economic
processes not only as consumers, but also as investors
and producers. P. Samuelson considers their role to be
a decisive factor in the balance of the market
mechanism.
Of domestic scientists, D.T. Yuldashev believes that by
increasing the economic activity of households,
regional development and employment issues can be
solved. B.K. Goyibnazarov, on the basis of statistical
analysis, emphasizes the imbalance in household
incomes and the variability of consumption patterns.
METHODOLOGY
This article uses the following methodological
approaches to determine the place of households in
economic relations:
• Analytical method
- the activities of households are
studied based on existing scientific literature, statistical
data and reports;
• Comparative analysis
- a comparative analysis of the
economic behavior of households is carried out based
on foreign and local experience;
• Empirical approach
- household income and expenses
are studied based on official statistical data (State
Statistics Committee, World Bank data);
• Systemic approach
- a comprehensive analysis of all
roles and interdependencies of households in the
economic system.
When talking about the household, we must first of all
distinguish between the concepts of household and
family. A family is understood as people living in the
same house, connected by kinship ties. The household
reflects the tasks, place of residence, budget, and a
community of people living together. Views on the
place of households in the system of economic
relations and their essence have changed over the
centuries. Views on households have transformed from
the initial views of Greek philosophers (Xenophon) of
the 5th-4th centuries BC to the new economic views on
the family that emerged in the last 50-60s of the 20th
century. The generalization of scattered ideas about
the household first occurred in ancient Greece.
Xenophon introduced the concept of “Oikonomia”, that
is, “Economics”. He believed that in order for every
citizen to become rich, it was necessary to properly
distribute and ensure the timely fulfillment of rational
economic tasks, to accumulate reserves, and to build
housing. Since commodity-money relations had not yet
taken deep root in the ancient world and natural
consumption was high, Xenophon believed that
households did not need to accumulate money. He
emphasized that economic activity was based on the
traditions behind it. The process of economic activity
was considered a natural process. Because the relations
inherent in the traditional system that prevailed at that
time occurred in response to changes in customs.
Aristotle considered the household to be the basis of
the political and economic system and considered the
process of economic activity as a condition for the
survival of the family.
The view of the household in connection with
agriculture and crafts was also characteristic of the
Middle Ages. In economic views, dominant and
dependent households were divided, since houses
(households) were divided into such classes. Such views
were also recorded in the regulations of crafts. In the
West, there were regulations on the activities of artisan
households belonging to the workshop, depending on
the profession of the workshop members. These
regulations established rules regulating relations within
the workshop. In the East, including in the cities of
Central Asia, the handicraft industry was essentially
considered a home industry and had a family character.
However, the labor of people such as masters, caliphs,
and apprentices was also used in this field. Relations
between them were carried out according to the
requirements of special regulations - treatises. The
labor of family members was also used in this.
Therefore, family relations acquired economic content.
However, these relations were not recorded in the
treatises.
If earlier households were considered as a component
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of the traditional system, then later they were studied
from the perspective of the market system. With the
emergence of economic theory as a science, scattered
ideas about the household took on a conceptual form
and rose to the level of theory. In classical and
neoclassical theory, it began to be considered as an
agent of market relations.
Mercantilists emphasized trade and believed that the
main function of households was to accumulate money
and accumulate wealth.
The founders of classical theory, A. Smith and D.
Ricardo, noted the distribution of wealth in society and
the fact that working households have different wealth.
D. Ricardo argued that the condition of workers is
determined by real wages and that this depends on
money income and the price of consumer goods. He
considers it a natural state for working capitalists and
landowners, households to appropriate different parts
of wealth.
Representatives of the early neoclassical theory
(marginalists) argue that household consumption is
influenced by the law of diminishing returns. E. Gossen
notes that as more goods are purchased and
consumption becomes saturated, the profitability of
additional goods tends to decrease. Marginalists
believed that it is necessary to select goods for
household consumption, and therefore it is necessary
to offer new goods with higher profitability to a
saturated market. They noted that in this case, the
activities of consumer households and manufacturing
firms are coordinated. The family budget was studied in
detail by the Austrian economist E. Engel after F. Leple.
He substantiates the relationship between the amount
of family income and the composition of its expenses.
The law embodied in his theory on this matter later
received the theoretical name "Engel's law". Modern
economic thought interprets the household as an
economic unit consisting of one or more individuals,
ensuring production and reproduction of human capital
in a market economy, striving to satisfy its needs to the
maximum extent, making independent decisions.
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Figure 1. Main stages of development in the process of gradual development of the household
At different stages of the development of human
society, the household as a separate institution within
the framework of economic systems is distinguished
by: having various organizational forms, performing a
specific task in the national economy, and being
regulated with the support of internal and external
means.
In the process of the gradual development of the
household, we can distinguish the following main
stages of its development (Figure 1).
Clarifying the place of households in the economy of
society at different stages of their development allows
us to draw some conclusions.
In Figure 1, presented below, we will dwell on the
stages of household development and their definition.
In this, a separate definition of each period and its
essence is given.
Firstly, the household, reflecting a set of formal and
informal rules of behavior, has always been one of the
main subjects of the national economy.
1- stage
• is associated with the formation of the family and the community. Couples are divided
into families, and communities are divided into family labor households, which
combine biological and production functions. On this basis, the family is formed as a
separate subject of economic activity.
2 - stage
• The process of separation of the family and its formation as a subject of private
property took place. At the same time, a market environment was formed in which
separated families were involved in the process.
3 - stage
• The state enters the arena as a regulator of household and general economic activities.
4 - stage
• associated with the formation of the family as a full-fledged economic entity, the
household fully reflected the characteristics of a market entity while fulfilling its role
as a seller of resources and a consumer-buyer of goods and services.
5 - bosqich
• characterized by the emergence of new economic entities - enterprises. They produce
goods and services for consumption by household members. The regulation of
enterprises is carried out by the state in accordance with its means of production and
market laws.
6-stage
• is determined by the emergence of qualitatively new economic relations between
households and enterprises. In the process of relations between entities, a division of
production activities into types has taken place.
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Secondly, the main force stimulating the economic
activity of the household is the creation of the
necessary conditions for a prosperous life of the family
and the effective implementation of the main functions
of the family and its comprehensive support.
Thirdly, at each stage of the development of human
society, the household is manifested in its own
organizational forms, in particular, in the traditional
economic system it is a primitive community and a little
later a separate family; in the ancient world - a slave
economy, free citizens; in the Middle Ages - a feudal
economy, a serf peasant economy, a free peasant, an
artisan, a merchant, a usurer; and in the market
economic system - an entrepreneurial economy, a
hired worker, a free peasant, an artisan, a merchant.
Fourth, the main product and commodity of household
activity is labor, which is used in one form or another
within and outside the household under certain
historical conditions.
–
Fifth, the household must have a source of
necessary goods to satisfy its needs as a consumer.
–
Sixth, households, which in the traditional
economic system form the basis of the economy of
society as a whole and are at the same time its
component, have been organized over the centuries on
the basis of rules, customs and lifestyles of people
formed in different conditions. In this case, each
household, relying mainly on its own strength and
capabilities, sought to realize its own interests.
–
K. McConnell and S. Bruler interpret the
household as an economic unit consisting of one or
more individuals who provide the economy with
resources and spend the monetary income received at
the expense of these resources on the purchase of
goods and services that satisfy the material needs of a
person, having a common budget and place of
residence. The concept of a household includes both
employed and unemployed persons in social
production, owners of means of production, land, large
and small capital, hired workers, and all consumers. It
is necessary to pay attention to the following aspects of
this definition of a household:
–
firstly, the household is an agent of the state
economic system, united by common organizers with a
single budget and a common place of residence;
–
secondly, the household is a supplier (producer) of
resources and at the same time a consumer of goods
and services, that is, an active participant in the
processes of social reproduction;
–
thirdly, the household is a simple consumer, a hired
worker, or a large or small owner of resources such as
land, labor, capital;
–
fourthly, the household includes not only those who
are engaged in the process of social reproduction, but
also those who are not engaged in it.
Depending on historical, religious and other socio-
economic factors, households can have different
shapes and sizes. Households are considered
unincorporated units because they are not established
as legal enti
ties.” Two points should be made from the
above definition:
First, a household is not only a socio-economic but also
a socio-ethical category, since, as noted, its form and
size depend on historical, religious, and many other
factors.
Second, a household, being an organized group of
people, is not considered a corporate unit and is not
established as a legal entity, and is considered an
individual.
Households as an economic entity of a market economy
have been widely studied by economists of our republic
si
nce the first years of independence. “Ahousehold is a
special entity in the economy consisting of a small
group of people who, in a given economic system and
social institutional situation, enter into relations with
other entities in terms of consumption, reproduction
and accumulation of labor power.” “A household is a
small group of people who have common income and
expenditure, consumption of property and a place of
residence.” The s
tudy of households as an economic
entity requires the definition of its objects, entities and
economic relations (Figure 2).
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Figure 2. Household as an economic entity
Households are objects and are considered various
factors of production (resources).
Household resources include: material (capital, land,
tangible goods, real estate), labor (human capital,
intellectual abilities and entrepreneurial skills),
financial, information, social, and also specific
(childbearing and care, time budget, leadership
qualities).
Households
have
advantages
and
disadvantages that are not inherent in formal
organizations (for example, firms) (Figure 3).
Financial resources are considered to be related to the
functions of consumption and savings, therefore, it is
important for households to clarify the optimal
proportions of funds allocated to one or another need,
based on the current situation or strategic goals. From
the point of view of savings, the household should
make decisions on its credit policy.
Analyzing households as an economic entity allows us
to identify their specific aspects (Figure 3).
Household as an economic entity
Subjects (participants)
Economic relations
Objects
Internal
External
Indi
v
idu
al
s, ot
her
m
em
b
er
s of
t
h
e f
am
il
y
house
ho
ld
A
m
ong ho
use
h
ol
d
m
em
be
rs on r
es
ou
rce
use
Prope
rt
y
re
la
ti
on
s (
p
ri
vat
e,
per
so
nal
)
Wi
th ot
her
ec
on
om
ic
ent
it
ies
Factors of
production
(resources)
Production and
sale of resources
Material
Labor
Financial
Informative
Social
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Figure 3. Specific aspects of analyzing households as economic entities
Based on the conducted analysis, it can be assessed
that the household as an economic category is a
multifunctional, economically isolated and popularized
economic entity that enters into interactions with other
economic entities (firms, the state) to jointly use
property, make joint decisions, and exchange available
resources in order to ensure the conditions of its life
activity and the expanded reproduction of human
capital in it. If in traditional societies the activities of
households depend on social norms and rules, then in
a market economy their activities largely depend on
economic laws and the behavior of socio-economic
institutions. Economic relations are diverse, they exist
at all stages of the reproduction process, at all levels of
management. At the same time, homogeneous
economic relations that constantly arise in any sphere
of socio-economic activity constitute the content of an
independent economic category. The final result of the
activities of households is the standard of living and the
level of well-being. The concept of disposable
household resources is used as a real indicator of the
well-being of the population. They include cash
expenditures of households (excluding material
assistance from relatives and alimony) and income
from personal subsidiary farms and other sources.
CONCLUSION
Households are one of the integral and active subjects
of the modern economic system. They play an
important role in economic relations not only as
consumers of goods and services, but also as suppliers
of labor resources, and in some cases as producers.
Research shows that the sources of income,
consumption habits and savings potential of
households directly affect the macroeconomic
indicators of the country's economy. Having thoroughly
analyzed the role of households in the economic
system based on domestic and foreign scientific views,
it is necessary to create the necessary conditions for
their development as economically active subjects, in
particular, to support family entrepreneurship,
increase financial literacy and improve social protection
mechanisms. Also, by ensuring the economic stability
of households, it is possible to have a positive impact
on social equality, stability of domestic demand and
macroeconomic growth factors in society. This, in turn,
is an important component of strategies for the
sustainable development of the national economy.
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