Market-based Economies

• The substantivist and formalist approaches are closest when discussing market-based economies. Since goods are exchanged based on price, it follows that the individual makes buying decisions based on the benefits he can expect for spending the agreed amount. The substantivist approach agrees that such an economic analysis is valid but introduces a duality, maintaining that the formal economic theory is only narrowly applicable while a broader approach must include the way the individual is embedded in his culture and society.
  
  

Institutional Markets

• The substantivist approach claims that it is relevant even in market-based economies. While agreeing that narrowly defined economic activity by individuals can be explained by formalist economics, it then examines institutional markets and finds that classic economic factors don't always explain the economic activity in these markets. Purchasing decisions made by companies, governments and non-profit organizations in institutional markets are more complex; factors other than pure economic benefit, such as politics, protectionism and cultural preferences often play major roles. The substantivist approach argues that it is therefore necessary to consider the social and cultural context of economic activity.
  
  

Centrally Planned Economies

• The formalist approach is one of universal application, as it maintains that even when an individual is constrained in his choices, for example in centrally planned economies, there are still economic costs and benefits to economic decisions and the individual will always make such decisions based on these costs and benefits. The substantivist approach maintains that, especially in planned economies, decisions made even on an individual level will not be purely economic. It introduces factors related to the nature of the society that exists in centrally planned economies, and argues that, as a result, there is no universally valid approach.
  
  

Economics in a Primitive Context

• Formalist economics has had to adjust when applying the universal approach to primitive cultures. Since pre-agricultural populations had few activities that would qualify as commerce, formalist economists broadened their definitions to include cultural and social benefits as a basis for decisions; this brought them closer to the substantivist approach. The latter, however, maintain that cultural and social factors are unique to particular societies and must be considered separately, not applied as part of a false universal economic framework.