Economic and Non-Economic Activities

Every day a person performs many kinds of activities — some are done to earn a living, and some are done purely out of love, duty or personal satisfaction. In the Andhra Pradesh Intermediate first-year commerce syllabus, this distinction between economic and non-economic activities is the starting point for understanding what "business" really is, because business is only one kind of economic activity.

An economic activity is any human activity that is undertaken with the object of earning income or a livelihood, and that can be measured in terms of money. When a farmer grows paddy for sale, a tailor stitches clothes for customers, a teacher works in a private college for a salary, or a trader buys and sells goods, each of them is performing an economic activity because the underlying motive is to earn money or a return of some kind. Economic activities are studied under three broad heads: business, profession and employment.

A non-economic activity, on the other hand, is an activity performed without any thought of monetary gain. The driving force behind it is love, affection, sympathy, patriotism, religious belief, social duty, or simple personal pleasure. A mother cooking food for her children, a college student donating blood, a person offering prayers at a temple, a citizen participating in a village clean-up drive, or someone gardening as a hobby — none of these is done to earn money, so none of them is treated as an economic activity, even though each one may take up real time and effort.

Distinguishing features of economic activities:

• The activity is undertaken mainly to earn income or a livelihood.
• It involves the production, exchange or distribution of goods and services.
• Its outcome can be expressed and measured in money.
• It forms part of the economic system of a country and contributes to national income.
• It is classified further into business, profession and employment.

Distinguishing features of non-economic activities:

• The motive is love, affection, sympathy, religion, patriotism, social duty or self-satisfaction — never money.
• There is no price or monetary consideration attached to the service rendered.
• The activity may still have great social or emotional value, but that value is not counted in the national income.
• It is purely personal or voluntary in nature.

A useful way for a student preparing for the AP Board Intermediate commerce examination to remember the difference is to ask a single question about any activity: "Is this being done with an eye on earning money, or purely out of love, duty or personal interest?" If the answer is the former, it is economic; if the latter, it is non-economic.