Methodological individualism


In the social sciences, methodological individualism is the principle that subjective individual motivation explains social phenomena, rather than class or group dynamics which are illusory or artificial and therefore cannot truly explain market or social phenomena.
Methodological individualism is often contrasted with methodological holism and methodological pluralism.

In economics

In neoclassical economics, people's behavior is explained in terms of rational choices as constrained by prices and incomes. The neoclassical economist accepts individuals' preferences as given. Gary Becker and George Stigler provide a forceful statement of this view:

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".
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".