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Would subsistence farming be considered as an economic activity?

Do economic activities have to provide goods for persons on a large scale (for export) or can it just be something done for sustenance that yields product? The definition of an economic activity affects your answer so please give your definition of an economic activity before answering the question. Additionally, please answer in detail.

1 Answer

  • John M
    Lv 7
    10 years ago
    Favorite Answer

    Economic Activity is usually understood to be the production AND sale of products and services. Since the subsistence farming products are directly consumed by the producer, they do not pass through the AND portion of that definition. It's useful to note that subsistence farming is also not reported as part of GDP which is the most commonly used indicator of the level of economic activity in a nation. But this is not because people feel the activity should not be included. It's because it is difficult to measure and does not occur at a level large enough as a percentage of GDP to render GDP useless. Instead it's noted that this and many other activities are not included, and models using the number must take that into consideration.

    So my answer is "it depends on what you are going to do with your measurement of economic activity". If the use you plan to make of the number or concept is less valuable if you omit subsistence farming, then it may be worthwhile to attempt a way of estimating it, perhaps by sampling the use of the inputs to subsistence farming and determining how to extrapolate your sample measurements to derive the value of that activity.

    Think of the following: If I am concerned about a relative income disparity between cities and villages in Nebraska and the rural households there, I could survey enough of both to figure out what the expenditures are in cities and villages that are avoided in rural areas that practice subsistence farming. then, I can adjust for the value of the farming work by substituting in what it would have cost to obtain the farm produce in the manner it is obtained in cities. Perhaps my findings will close the income gap somewhat, making policy changes less urgent.

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