Minding the gap between micro and macro: reductive and non-reductive strategies applied to economics

Abstract

This dissertation discusses the application of two reductive and one non-reductive approaches to relate macro-to-microeconomics properties. Reduction is treated as an explanatory strategy where the inquirer transfers the explanans of her target of interest (explanandum) to the next level down. In the context of economics, this condition is not sufficient to satisfy a reduction of a macroeconomic phenomenon/principle to microeconomic principles. It is also required that the explanans (the explainee doers) admits the properties of individuals (beliefs, expectations) only. The other side of this view, the non-reductive relation of macro-to-microeconomics, is positively attained when the inquirer explains how a given macroeconomic phenomenon was eventually possible by appealing to other features that do not stand on individuals’ properties. Contrary to the reductionist approach, the non-reductionist contender is the case when other elements included in the microeconomic level share the same causal efficacy to determine the manifestation of the macroeconomic phenomenon. In this dissertation, I argue that both approaches, the reductive and non-reductive frameworks, are feasible according to the context. By assessing a classical economic model as a case study, the Lucas’s Phillips curve model, I demonstrate how the selected reductive paradigms, the Nagel’s reduction and constitutive mechanism, fit the model, illustrating the Lucasian approach as a positive example of reduction of a macroeconomic principle/phenomenon to a set of microeconomic principles. Conversely, I also detail and identify an example of non-reductive explanation where outer elements inside the microeconomic level are as much efficacious as the individuals’ properties for determining the chosen macroeconomic set of properties. I demonstrate that, contrary to Kevin Hoover’s belief, the dispute between reduction and supervenience (non-reductive approach), the alternative concept employed to describe how micro and macro sets are related, is not an all-or-nothing matter: we may have both scenarios depending on the context and explanatory purposes.