1.1.2

Positive & Normative Economic Statements

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Positive and Normative Statements

Positive and normative statements capture different attitudes to the world. Positive statements describe the world as it is, whereas normative statements describe how the world should be.

Illustrative background for Positive statementsIllustrative background for Positive statements ?? "content

Positive statements

  • Positive statements describe the world as it is. They are objective statements that can be proved.
    • E.g the proposal of the new high speed rail HS2. If the exact benefits exceed the exact costs, you could say the project is worth doing. This is positive analysis. However, you may not always know costs & benefits perfectly.
Illustrative background for Normative statementsIllustrative background for Normative statements ?? "content

Normative statements

  • Normative statements describe how the world should be. They are opinions that contain value judgements.
    • E.g imagine an economist argued for higher unemployment benefits during a recession, because a rich country should take care of its citizens. This is normative analysis.
Illustrative background for Value judgmentsIllustrative background for Value judgments ?? "content

Value judgments

  • Value judgments are often found in normative statements. They are judgements about society that cannot be quantified and tested.
    • E.g the homelessness problem in Oxford needs to be addressed and funds should be redistributed to do this. This judgement is within a normative statement.
  • Value judgements affect economic decision-making, so normative statements are important.

Jump to other topics

1Introduction to Markets

2Market Failure

3The UK Macroeconomy

4The UK Economy - Policies

5Business Behaviour

6Market Structures

7A Global Perspective

8Finance & Inequality

9Examples of Global Policy

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