Economic functions found in any economic system can be observed in the family as a production and consumption unit of analysis. The development of a resource base and the decisions in performing each function are each influenced by the larger economy and influence the larger economy. Decisions about the use of the resource base determine the ultimate outcomes of satisfaction with goods and services and quality of life. These relationships, as hypothesized in a conceptual flow model presented in this article, can direct the selection of variables in empirical research. Results of several research projects that included selected components of the economic functions document the validity of the family economy model and contribute to theory development of the sources and role of consumption. © 1993 John Wiley & Sons, Inc.