Alan Kirman on Microfoundations

He writes,

Although in fields such as statistical physics, ecology and social psychology it is now widely accepted that systems of interacting individuals will not have the sort of behaviour that corresponds to that of one average or typical particle or individual, this has not had much effect on economics.

Note that in macroeconomics, an economist will say that a model is “microfounded” if (and, seemingly, only if) you use a representative individual to represent the entire economy. Kirman, like me, objects to this. However, in my opinion one does not need a lot of floofy rhetoric about “complex adaptive systems” to know that this is wrong. It is sufficient to recognize the importance of specialization in the economy.

2 thoughts on “Alan Kirman on Microfoundations

  1. You’re ignoring the heterogeneous agents literature, which is massive, growing, and taught at most mainstream economics departments (indeed, in my PhD program we spent very little time on rep agent models). It may not get at the things you’re interested in, but you’re clearly incorrect to say that economists only call a model microfounded if it’s rep agent. As I’ve said many times before: critics of macroeconomics will never be successful so long as their description of the field is 25 years out of date! Most macroeconomists find no reason to continue reading a critique that starts with false assumptions about what macroeconomists actually do.

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