methodological individualism

Kaushik Basu
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Abstract

Methodological individualism holds that a proper explanation of a social regularity or phenomenon is grounded in individual motivations and behaviour. Although many economists claim to be methodological individualists, economics has always used social concepts and categories. As Schumpeter pointed out, nearly a century ago, price in a competitive model is an irreducibly social concept. Each individual takes the price as given but the price that comes to prevail is an outcome of the choices made by all individuals. Since Veblen, economists have increasingly recognized that individual preferences are endogenous and may be responsive to what happens in society at large.
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How to cite this article

Basu, Kaushik. "methodological individualism." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 22 July 2014 <http://www.dictionaryofeconomics.com/article?id=pde2008_M000352> doi:10.1057/9780230226203.1092

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