Position and Behavior, and Mack and Mike

"The sum of micro is macro"

No.


"The answer that macro is the sum of micro is technically correct." -- Quora

No, it is not correct. And adding the word "technically" doesn't make it correct.


"The whole (macroeconomics) is but the sum of the parts (microeconomics)" -- the same Quora

No. If Macro is nothing but the sum of Micro, then there can never be a fallacy of composition. But that fallacy arises. Therefore it cannot be true that Macro is nothing but the sum of Micro.


Again at the same Quora link, we read that macroeconomics "studies the functioning of economy as a whole", while microeconomics "analyzes the behaviour of individual components like industries, firms, and households." Lets start with that.

Take an "individual component" of the economy: a firm, say. The behavior of this firm includes employing people to make things. It also includes selling what it makes. Thus the firm's behavior affects not only its own position but also that of its employees and that of its competitors. It also affects labor markets and resource markets and the market for its product, to some degree: less for a small firm, more for a large firm.

The influence of our firm's behavior, to some degree changing the position of its employees and its competitors, will in some measure affect the behavior of those employees and competitors. To a lesser degree it will affect the markets in which it participates and, to a still lesser degree, other markets and the participants in those markets.

Now, consider all of these influences arising from the behavior of our example firm. Do these all have perfectly linear effects? I mean, if a $1 decision by our firm leads in sum to a one-cent change in the behavior of the rest of the economy, does a $100 decision lead to a $1 change for the rest of the economy? It would have to, if Macro is nothing but the sum of Micro.

And then, does a $100 billion dollar decision by our firm lead to a $1 billion change? It is highly unlikely. It is highly unlikely that once you work out the effects of a one-dollar change, you can scale your numbers up to billions and have everything stay in perfect proportion.

But if things don't stay in perfect proportion, then the influences arising from the behavior of our firm are not perfectly linear.

And if those influences are not perfectly linear, then the sum of micro is not macro.