Positive and normative economics

Ethics In philosophynormative statements make claims about how things should or ought to be, how to value them, which things are good or bad, and which actions are right or wrong.

Positive and normative economics

Positive and Normative Economists make a distinction between positive and normative that closely parallels Popper's line of demarcation, but which is far older.

David Hume explained it Positive and normative economics inand Machiavelli used it two centuries earlier, in A positive statement is a statement about what is and that contains no indication of approval or disapproval.

Economics Tutorials

Notice that a positive statement can be wrong. A normative statement expresses a judgment about whether a situation is desirable or undesirable.

Notice that there is no way of disproving this statement. If you disagree with it, you have no sure way of convincing someone who believes the statement that he is wrong.

Economists have found the positive-normative distinction useful because it helps people with very different views about what is desirable to communicate with each other.

Libertarians and socialists, Christians and atheists may have very different ideas about what is desirable.

Positive and normative economics

When they disagree, they can try to learn whether their disagreement stems from different normative views or from different positive views. If their disagreement is on normative grounds, they know that their disagreement lies outside the realm of economics, so economic theory and evidence will not bring them together.

However, if their disagreement is on positive grounds, then further discussion, study, and testing may bring them closer together. Economists can confine themselves to positive statements, but few are willing to do so because such confinement limits what they can say about issues of government policy.

Both positive and normative statements must be combined to make a policy statement.

Economics Tutorials | Econ Tutorials | Economics Guide

One must make a judgment about what goals are desirable the normative partand decide on a way of attaining those goals the positive part. Economists often see cases in which people propose courses of action that will never get them to their intended results. If economists limit themselves to evaluating whether or not proposed actions will achieve intended results, they confine themselves to positive analysis.

You should realize that although economists can speak with special authority on positive issues, even the best can be wrong. However, virtually all economists prefer a wider role in policy analysis, and include normative judgments as well. On normative issues economists cannot speak with special expertise.

Put somewhat differently, addressing most normative issues ultimately depends on how one answers the following question: Most statements are not easily categorized as purely positive or purely normative. Rather, they are like tips of an iceberg, with many invisible assumptions hiding below the surface.

Introduction to Macroeconomics

Suppose, for example, someone says, "The minimum wage is a bad law."Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing.".


Jensen Journal: Capitalism and Society, Volume 12, Issue 1, May Social Science Research Network (SSRN). While positive economics is objective and based on facts, normative economics is subjective and value-based. One example of normative economics is stating that the government has a duty to pay for healthcare, whereas a positive approach states that the government funding citizens' healthcare incurs costs.

Positive economics (as opposed to normative economics) is the branch of economics that concerns the description and explanation of economic phenomena. It focuses on facts and cause-and-effect behavioral relationships and includes the development and testing of economics theories.

Positive and normative economics

40 R. Thaler, Toward a positive theory of consumer choice important prediction in economics, has been shown to be negative even if consumers choose at random [-Becker ()]. Recent research has.

6. Positive vs. Normative Statements (vs. = versus) different opinions about what is (measurable, verifiable facts) different opinions about what ought to be (value judgment).

Positive and Normative