Positive & Normative Economic Statements
Economics: Edexcel A A Level, topic 1.1.2
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.
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.
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.
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.
Test yourself on Positive & Normative Economic Statements
Which of the following is a positive statement?
'It is faster for me to drive to school than walk to school'. Is this a positive or normative statement?