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Methodological individualism is the view that social phenomena can only be understood by examining how they result from the motivations and actions of individual agents. The use of methodological individualism is identified with economists of the Austrian school, among others.
In economics, people's behavior is explained in terms of rational choices, as constrained by prices and incomes. The economist accepts individuals' preferences as givens. Becker and Stigler provide a forceful statement of this view:
Economist Mark Blaug has criticized over-reliance on methodological individualism, "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."
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