Sunday, May 20, 2012

Microfoundations is spreading

Interesting link from Mark Thoma yesterday:
Cultural entities and characteristics do require microfoundations, and it is in fact a fruitful avenue of sociological and ethnographic investigation to discover the concrete social mechanisms and pathways through which these entities come to be embodied in various populations in the ways that they are.  
The author is Dan Little from Understanding Society - a blog that I will be reading more often.

I think it's excellent that other branches of social sciences are thinking about microfoundations and their affect on understanding aggregate behavior. Maybe other fields will find creative methods of aggregation that will benefit economics.

As a side note - I'm reading Maarten Janssen's Microfoundations as a bit of light reading for the summer. He uses two very good examples for using microfoundations in a way that builds fairly strong aggregate models. The first is Mancur Olson's optimal utility hypothesis, and the second is the Ideal gas law. I found the aggregation used in the IGL to be a remarkable use of microfoundations, and I will probably post more about it in the future.

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