In thesocial sciences,methodological individualism is a method for explaining social phenomena strictly in terms of the decisions of individuals, each being moved by their own personal motivations. In contrast, explanations ofsocial phenomena which assume that cause and effect acts upon whole classes or groups are deemed illusory, and thus rejected according to this approach. Or to put it another way, only group dynamics which can be explained in terms of individual subjective motivations are considered valid. With its bottom-up micro-level approach, methodological individualism is often contrasted withmethodological holism,[1] a top-down macro-level approach, andmethodological pluralism.[2]
This framework was introduced as a foundational assumption within the social sciences byMax Weber, and discussed in his bookEconomy and Society.[3] Within later schools of economic thought, such as theAustrian School, strict adherence to methodological individualism is considered a necessary starting principle. It draws heavily upon assumptions ofneoclassical economics, where social behavior is explained in terms of rational actors whose choices are constrained by prices and incomes, and where individuals' subjective preferences are treated as a given.[4]
EconomistMark Blaug has criticized over-reliance on methodological individualism in economics, saying that "it is helpful to note what methodological individualism strictly interpreted [...] would imply for economics. In effect, it would rule out all macroeconomic propositions that cannot be reduced to microeconomic ones [...] this amounts to saying goodbye to almost the whole of received macroeconomics. There must be something wrong with a methodological principle that has such devastating implications".[5]
Similarly, the economistAlan Kirman has critiquedgeneral equilibrium theory andmodern economics for its "fundamentally individualistic approach to constructing economic models", and showed that an individualistcompetitive equilibrium is not necessarily stable or unique. However, stability and uniqueness can be achieved if aggregate variables are added, and as a result he argued "the idea that we should start at the level of the isolated individual is one which we may well have to abandon".[6]
^Piana, Valentino (2020)."Pluralism".Economics Web Institute. RetrievedApril 7, 2020.
^Heath, Joseph (2020),"Methodological Individualism", in Zalta, Edward N. (ed.),The Stanford Encyclopedia of Philosophy (Summer 2020 ed.), Metaphysics Research Lab, Stanford University, retrievedSeptember 18, 2021
^Stigler, George; Gary Becker (March 1977). "De gustibus non est disputandum".American Economic Review.67 (2): 76.JSTOR1807222.
^Kirman, Alan (1989). "The Intrinsic Limits of Modern Economic Theory: The Emperor has No Clothes".The Economic Journal.99 (395):126–39.doi:10.2307/2234075.hdl:1814/23029.JSTOR2234075.
Geoffrey Hodgson, (2007) "Meanings of Methodological Individualism",Journal of Economic Methodology 14(2), June, pp. 211–26.
Harold Kincaid (2008), "Individualism versus Holism,"The New Palgrave Dictionary of Economics, 2nd ed., New York: Palgrave MacmillanISBN978-0-333-78676-5Abstract.
Mises, Ludwig (1998). "The Principle of Methodological Individualism".Human Action: A Treatise on Economics – The Scholar's Edition. Ludwig von Mises Institute. pp. 41-43.ISBN9780865976313.
