Methodological individualism

Method of analysis in the social sciences

In the social sciences, methodological individualism is a framework that describes social phenomena as a consequence of subjective personal motivations by individual actors. Class or group dynamics, which operate on systemic explanations, are deemed illusory, and, thus, rejected or de-prioritized. With its bottom-up micro-level approach, methodological individualism is often contrasted with methodological holism,^[1] a top-down macro-level approach, and methodological pluralism.^[2]

History within the Social Sciences

This framework was introduced as a foundational assumption within the social sciences by Max Weber, and discussed in his book Economy and Society.^[3] Within later schools of economic thought, such as the Austrian School, strict adherence to methodological individualism is considered a necessary starting principle. It draws heavily upon assumptions of neoclassical 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]

Criticisms

Economist Mark 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 economist Alan Kirman has critiqued general equilibrium theory and modern economics for its "fundamentally individualistic approach to constructing economic models", and showed that an individualist competitive 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]

References

^ Zahle, Julie, "Methodological Holism in the Social Sciences", The Stanford Encyclopedia of Philosophy (Winter 2021 Edition), Edward N. Zalta (ed.), URL = <https://plato.stanford.edu/archives/win2021/entries/holism-social/>.
^ Piana, Valentino (2020). "Pluralism". Economics Web Institute. Retrieved April 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, retrieved September 18, 2021
^ Stigler, George; Gary Becker (March 1977). "De gustibus non est disputandum". American Economic Review. 67 (2): 76. JSTOR 1807222.
^ Blaug, Mark (1992). The Methodology of Economics: Or, How Economists Explain. Cambridge University Press. pp. 45–46. ISBN 0-521-43678-8.
^ Kirman, Alan (1989). "The Intrinsic Limits of Modern Economic Theory: The Emperor has No Clothes". The Economic Journal. 99 (395): 126–139. doi:10.2307/2234075. hdl:1814/23029. JSTOR 2234075.