This dissertation is a
theoretical exploration of whether
economic methodology should shift from
reductionism in traditional economic
thinking on welfare to a “macro”
approach, i.e. one that is based on
aggregate outcomes which cannot be fully
explained through reductionist
perspectives of individual behaviours.
Welfare economics is dominated by
mainstream thinking based on
reductionist perspectives of individual
behaviours. Such perspectives form the
basis of fundamental concepts in welfare
economics yet have substantial
limitations and deviate from what is
measured and applied in the real world.
Economics has consequences for real
people, and a business-as-usual
approach should not continue. Other
theories beyond fundamental concepts,
such as those on achieving efficiency in a
world where distortions exist, social
contexts affecting economic outcomes,
alternate ways of evaluating economic
policy, and debates on equity, highlight
important elements not adequately
addressed by traditional thinking in
welfare economics. An alternative
methodology is desired. A macro
approach, i.e. one that is based on
aggregated outcomes rather than
reductionism, is advocated. Macro concepts can be informed by theories on
complex systems, human agency and
alternate ontological frameworks. This is
an exciting area for the future of
economic thinking.
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