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The Individual Failings of Economics

In recent decades, economics has gone from defining itself as a set of questions to defining itself as a set of methods, all based on individuals making decisions. By doing so, it has undermined its own ability to make progress.

CAMBRIDGE – Economics could advance enormously if it relaxed one of its most precious assumptions: methodological individualism, or the idea that any explanation needs to be related to individuals making sensible decisions. This requirement puts the discipline at a huge disadvantage vis-à-vis the natural sciences, because it prevents progress in understanding the relationship between the micro and the macro.

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