Economic vs. Non-Economic Activities: Explained

Any human activity which is performed in exchange for money or money’s worth is known as an economic activity. For example, workers work in the factory to earn wages.  On the other hand, any activities which do not have any monetary motive and are performed with a feeling of love, sympathy, humanity, are known as non-economic activities. For example, playing in a garden, dancing, housewife cooking dinner for the family, or a boy helping an old man crossing a road, etc.  Read on to know more about economic and non-economic activities and how they differentiate.

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What are Economic Activities?

Economic activities are those activities that are based on the production, distribution, exchange, and consumption of goods and services. Economic activities are carried out by human beings to earn their income and to acquire wealth. For example, a trader, an agriculturist, a manufacturer, a doctor, a teacher, and laborers working in a factory are all examples of economic activities. These activities are performed by people to earn their livelihood and to acquire wealth.

The essence of economic activities is the production, distribution, exchange, and consumption of goods and services. The return of economic activities can be expressed in monetary terms. A businessman earns profit, a doctor charges fees for his services, or a farmer grows vegetables to sell in the market.

What are the Characteristics of Economic Activities?

The principal characteristics of economic activities can be summarized as follows 

• Economic Motive

The primary motive of economic activities is to earn profit and consequently acquire wealth. These activities are undertaken by individuals to earn their livelihood through economic gain.

• Resource Usage 

Undertaking economic activities require utilization of resources like land, labor, capital, etc.

• Rational Usage 

Economic activities involve maximization of profit by allocating scarce resources rationally. This includes making optimum utilization of land, labor, capital and every other factor involved in production.

• Legally Binding 

Activities that are performed for monetary gain can be termed economic activities only if they are lawful.  For instance, activities like burglary, theft, smuggling, etc. cannot be included under the purview of economic activities since they are unlawful.

• Socially Accepted 

Economic activities undertaken must adhere to social norms. They cannot be socially undesirable.

What are the Different Economic Sectors Where Economic Activities are Performed?

The different economic sectors where economic activities are performed includes the following:

• Primary Sector

• Secondary Sector

• Tertiary Sector

• Quaternary Sector

• Quinary Sector

Let us discuss each sector in brief.

• Primary Sector

The primary sector of an economy mostly involves the production or extraction of raw materials. Primary economic activities include agricultural activities (both commercial and subsistence), forestry, mining, grazing, quarrying, fishing, hunting as well as gathering. Processing raw materials and their packaging are also included in this sector. 

India is a country where a large portion of the population is engaged in the primary sector, especially agriculture.

• Secondary Sector

This is the sector of the economy, which is involved with the production of finished goods from the raw material supplied by the primary sector. This sector involves all the manufacturing, processing and construction jobs of an economy.

Few of the activities that are associated with this sector include smelting, metalworking, textile and automobile production, construction work, work at chemical and engineering industries, etc. This sector employs a mixture of organized and unorganized workers.

• Tertiary Sector

The tertiary sector mostly denotes an economy’s service industry. In this sector, the economic activities include selling goods produced by the secondary sector, as well as providing commercial services to the general population and other sectors of the economy. The economic activities undertaken in the tertiary sector include wholesale and retail sales, restaurant business, distribution and transportation of goods and services, etc.

While these are the three major classifications of sectors in an economy, few countries also include the sections mentioned below -  

• Quaternary Sector

Closely associated with the tertiary sector, the ventures under the quaternary sector include intellectual activities that are linked to technological innovations. Some of the economic activities associated with this sector include those in the fields of information technology, research, education, culture, library, etc. In India, currently, most of the individuals engaged in the organized sector can be included in the quaternary sector of the economy.

• Quinary Sector

This is the sector that comprises top executives and professionals involved in government jobs, universities, science, culture, healthcare, etc.

Examples of Non-Economic Activities

Following are the some examples of non-economic activities:

• Undertaking Charitable Activities

There are various non-profit organizations working towards social welfare without any monetary gains. Volunteering such an organization comes under the category of non-economic activities, since an individual does so without expectations of any financial benefits.

• Activities Undertaking During Leisure

Many people decide to pursue their hobbies or engage in activities that do not produce any monetary remuneration during their leisure time. Such activities come under the =category of non-economic activities.

• Religious and Cultural Activities

Visiting a temple and offering prayers, engaging in cultural activities, etc. are included under non-economic activities because they are mostly performed to fulfill one’s spiritual needs rather than monetary ones.

• Activities Undertaken to Fulfill Familial Commitment

If a doctor provides healthcare to his/her family members or a teacher teaches his/her own children, these activities are  considered as non-economic activities. This is because the professionals undertake these activities as an obligation towards their families and do not earn any monetary profit from them.

Thus, any activity that is not included under the category of economic activities and does not generate any financial gain comes under non-economic activities. 

Characteristic of Non-Economic Activities

 Non -Economic activities are characterized by the following features: 

• Self-Satisfaction- Non -economic activities are voluntary in nature and undertaken solely for self-satisfaction.

• Obligatory- Non-economic activities can also be undertaken as an obligation or compulsion to satisfy social norms, even though they do not generate any monetary profit.

• No Financial Remuneration- The most important characteristic of any such activity is that it does not bear any financial profit for the person undertaking them. That is why these activities cannot be considered vital for an economy. These are merely for recreation or are socially binding.

Economic Activities and Non- Economic Activities Differences:  Tabular Representation

Conclusion

With the above discussion, it is concluded that the only factor which differentiates both the economic and non-economic activities is their objective. The same activity can be economic and non-economic simultaneously. For example,, Suppose a father is dropping his child at school in his car, this is a non-economic activity, as he drops his son out of affection and care, but if there are five other children along with his going in the car who pays money for conveyance to him, then that is is considered as an economic activity, as the person is getting money for service he is providing.