Individual and social choices

Both methodological and substantive individualism start from the position that individuals make their own choices, that these choices are made independently and that they are diverse. None of those assumptions is unreasonable, but once that much has been accepted, it can be difficult to move from there to any meaningful concept of social choice or welfare.

Bentham proposed that the welfare of a society could be found in ‘the greatest happiness of the greatest number’. This outweighs the position of the individual in both moral and substantive terms: the good of anyone can be set aside for the good of the majority. It is possible to dismiss this as a position no-one really believes, but people who do not believe it commonly end up doing it anyway. It happens in the practice of cost-benefit analysis, a procedure recommended by the World Bank and the UK Treasury. Cost-benefit analysis works by summing up all the costs experienced by all parties on one side, and all the benefits on the other. It is not quite the sum of happiness, but it is the sum of economic well-being, usually expressed in terms of money. The main justifications for cost-benefit analysis are modest: that it is a useful decision-making procedure, that it adds to transparency and that it is probably better than the alternatives. The principle is nominally based in methodological individualism, in the sense that it begins from examining the utility of each individual distinct from others, and aggregating results; but it is not morally individualistic at all. On the contrary, it over-rides the position of individuals who face different outcomes.