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.
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.