Methodological individualism is the requirement that causal accounts of social phenomena explain how they result from the motivations and actions of individual agents, at least in principle.
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In economics
In neo-classical economics, people's behavior is explained in terms of rational choices, as constrained by prices and incomes. The neo-classical economist accepts individuals' preferences as givens. Becker and Stigler provide a forceful statement of this view:
On the traditional view, an explanation of economic phenomena that reaches a difference in tastes between people or times is the terminus of the argument: the problem is abandoned at this point to whoever studies and explains tastes (psychologists? anthropologists? phrenologists? sociobiologists?). On our preferred interpretation, one never reaches this impasse: the economist continues to search for differences in prices or incomes to explain any differences or changes in behavior.Criticisms
Economist Mark Blaug has criticized over-reliance on methodological individualism in economics: "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."