Microeconomics: The Study of Individual Decisions and Its Utilitarian Roots
Microeconomics investigates how individuals and small organizations make decisions about allocating limited resources, a field that evolved from neoclassical economics' efforts to apply mathematical reasoning to economic concepts. Philosophically, it is rooted in Utilitarianism, which emerged in the 18th century and is largely attributed to Jeremy Bentham, with mathematical antecedents in Daniel Bernoulli's work. In his 1780 treatise, An Introduction to the Principles of Morals and Legislation, Bentham articulated the "principle of utility," defining it as the basis for judging actions by their tendency to augment or diminish happiness for individuals or the broader community.
He further clarified that "utility" refers to any property that produces benefit or happiness, and that the "interest of the community" is simply the sum of its individual members' interests. This foundational idea of maximizing collective or individual well-being through resource allocation remains central to modern microeconomic analysis.