Sheriff Nil, gr.

What is the difference between economic sociology and mainstream economics

in their explanation of social phenomena?

Economic sociology is an approach to economic phenomena from a sociologist’s point of view.

Even though economics and sociology are different subjects, it may be hard to imagine how
their approaches differ when studying economic phenomena. Moreover, why is sociological
approach even necessary if the phenomena is economic? What are the failures of purely
economic explanation that allowed economic sociology to appear? This essay will explain the
differences between two approaches and then show the cons of each of them.

To begin with, the most important distinction between sociological and economic approaches
to economic phenomena is that sociologists take into large consideration social ties when
analyzing behavior, while economists often purely focus on preferences and rationality. Of
course, economists try to consider all (including sociological) factors and sociologists take into
account rationality, but their emphases are made on the factors mentioned before. For
example, when someone decides to change a job, an economists is more likely to pay attention
to factors like salary, working hours, distance from home, etc. while economic sociology would
pay more attention to the actor’s religion, cultural background, in what society he grew up,
how others’ opinion could affect this decision, etc.

So, why did economic sociology become necessary? There are some blank spaces that
mainstream economics fails to explain. For example, if an economists want to study demand of
a book called “Religion is the opium of modern society”, considering religious beliefs would be a
must. But how can an economist include this factor in his highly mathematical model based on
utilities and rationality? What number should be used for this variable? 0, 0.5, 1? And here is
where sociological perspective is essential. Economist cannot include some factors into their
model without economic sociology because some actions are inseparable from social relations,
which is the idea of social embeddedness of economic action, father of which is considered to
be Karl Polanyi, but it was also discussed by Durkheim.
Granovetter also expressed this idea, but in a slightly different light – he claimed that decisions
are not only made based on factors internal to the person observed, but also by expected
behavior of other agents. Let’s say a person wants to buy a luxury bag. When making this
decision they will consider what bags other people wear – not to be too outstanding from the
society, but also not to be too “basic” (this idea was taken from Mari Grinde Arnzen).
Mainstream economists usually don’t study such processes, but they are important to
understand this phenomena.

But, at the same time economic phenomena cannot be explained purely by sociology. Of
course, when picking a job people consider salary, distance and other economic factors, so pure
sociology cannot explain economic phenomena completely. It completes the analysis rather
than provide a better alternative solution. Sociology, in a way, helps consider factors that are
impossible to estimate by purely economic methods.

To conclude, economic sociology differs from mainstream economics because of its emphasis
on social relationships and how they cause economic phenomena. They provide different
visions for phenomena, but become complete only when combined together.