What is positive and normative economics

Positive and normative economics

The distinction between positive and normative economics is a dichotomy in economics.

Positive economics and analysis

Normative Economics and Analysis

The normative economics deals with discourses about economic order, political goals and intentions. It is therefore based on values ​​and social norms and is prescriptive (prescriptive). It is a normative science. For example, welfare economics makes statements about whether certain changes are desirable.[1][2][3]

The normative analysis In economics, the main focus is on the question “What should be?”. This analysis is an assessment that goes beyond a prognosis. B. goes into the question "What is the best?" A normative analysis often contains value judgments. This can represent your own opinion. In economic policy, when there are forecasts that contain value judgments, it cannot be said exactly which is the best policy. The normative analysis asks, for example, “Should unemployment be reduced?”.

Distinction

The positive analysis is opposed to the normative analysis and the normative analysis is opposed to the positive analysis. Although this distinction appears straightforward at first glance, it is the subject of discussions of economic philosophy that go back to antiquity and by David Hume[4] intensely led (see Hume's Law).[1] While in his book The Scope and Method of Political EconomyJohn Neville Keynes (1890) still speaks of a threefold division of the discipline into positive, normative and applied economics ("art of economics"), the latter using findings from positive and normative economics as well as other social sciences (politics, sociology) to make suggestions for action should formulate practical politics, Milton Friedman's famous essay "The Methodology of Positive Economics" (1953) is based on a dichotomy into positive and normative economics.[5][6][7] However, it is questioned whether a purely positive analysis is even possible because certain values ​​are already implicit in the choice of models and terms.[3][8]

Individual evidence

  1. abD. Wade Hands: The positive-normative dichotomy and economics. In: Dov M. Gabbay, Paul Thagard, John Woods, Uskali Mäki (Eds.): Philosophy of Economics. Handbook of the Philosophy of Science. Elsevier, 2012, pp. 219ff., ISBN 978-0-0809-3077-0.
  2. ↑ Eric van de Laar, Jan Peil: 49. Positive versus normative economics. In: Jan Peil, Irene van Staveren (eds.): Handbook of Economics and Ethics, Edward Elgar, Cheltenham, (UK) & Northampton (MA) 2009, pp. 374ff., ISBN 978-1-84542-936-2, doi: 10.4337 / 9781848449305.00056.
  3. abSamuel C. Weston: Toward a Better Understanding of the Positive / Normative Distinction in Economics. In: Economics & Philosophy 10 (1), April 1994, pp. 1-17, doi: 10.1017 / S0266267100001681.
  4. ↑ David Hume: An Inquiry Concerning the Principles of Morals. The Open Court Publishing Company, LaSalle (Illinois), 1960 [1777].
  5. ↑ Milton Friedman: The Methodology of Positive Economics. In: Essays on Positive Economics. Univ. of Chicago Press., Chicago 1953, pp.145-178.
  6. ↑ John Neville Keynes: The Scope and Method of Political Economy. Macmillan, London 1890.
  7. ↑ David Colander: The Lost Art of Economics. In: The Journal of Economic Perspectives. Volume 6, No. 3. American Economic Association, 1992, pp.191-198.
  8. ↑ Gunnar Myrdal: Implicit Values ​​in Economics. In: Daniel M. Hausman (Ed.): The Philosophy of Economics. Cambridge University Press, Cambridge 1984, pp. 250-259.