Austrian school
Sign in to saveschool of economic thought that advocates strict adherence to methodological individualism rather than focusing on aggregate variables, equilibrium analysis and societal groups
AI overview
The Austrian school is an approach to economics that focuses on understanding how individuals make decisions rather than analyzing broad economic trends or group behavior. It matters because it offers a different perspective on how economies actually work, emphasizing individual choice over the statistical patterns that most mainstream economists study.
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Article
The Austrian school of economics is a school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivations and actions of individuals along with their self-interest. Austrian-school theorists hold that economic theory should be exclusively derived from basic axioms of human action, known as praxeology, rather than primarily from statistical analysis.
The Austrian school originated in 1871 in Vienna with the work of Carl Menger, Eugen von Böhm-Bawerk, Friedrich von Wieser, and others. It was methodologically opposed to the Historical school, in a dispute known as Methodenstreit, or methodology quarrel. Current-day economists working in this tradition are located in many countries, but their work is still referred to as Austrian economics. Among the theoretical contributions of the early years of the Austrian school are the subjective theory of value, marginalism in price theory and the formulation of the economic calculation problem.