New Behavioral Economics, Methodological Individualism and Dismissal of Societal

This paper aims to present a methodological criticism on the new behavioral economics approach, which is one of the novel approaches that emerged towards the end of the twentieth century in economic analysis, and in line with this criticism, to argue that new behavioral economics is far from being successful approach since it neglects the societal dimension of current economic problems. While new behavioral economics, with its criticism directed at the understanding of rationality that constitutes the hard core of neoclassical economics, appears as a promising approach for a more realistic analysis of economic reality, it inherited the methodological individualism approach, which is the most problematic part in the methodological framework of orthodoxy, and in a sense did not completely sever its ties with orthodoxy. The methodological individualism approach reduces the whole of economic analysis to the economic decision-making process and the representative individual. This reductionism means neglecting the social structure in economic analysis. Thus, the new behavioral economics continue to miss structural economic problems due to their methodological orientation. It is apparent that new behavioral economics, which emerged in the Neoliberal stage when the structural problems of the economic system were transformed into individual responsibilities, have also assumed the task of legitimizing the neoliberal policy proposals.