The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Methodological Individualism

  • Kaushik Basu
Reference work entry


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.


Arrow, K. Atomism Bertrand oligopoly Buchanan, J. Class interest Cournot oligopoly Dworkin, R. Endogenous preferences German school Hayek, F. A. Homo economicus vs. homo sociologicus Menger, C. Methodological holism Methodological individualism Normative individualism Schumpeter, J. Self-interest Smith, A. Veblen, T. Weber, M. 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Kaushik Basu
    • 1
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