Positive and normative economics

For a broader discussion of the same idea in philosophy, see Fact–value distinction.

Positive economics is the study of the facts in economics and normative economics is the study of the values in economics. In the philosophy of economics, economics is often divided into positive and normative economics. Positive economics focuses on the description, quantification and explanation of economic phenomena;[1] normative economics often takes the form of discussions about fairness and what the outcome of the economy or goals of public policy ought to be,[2] as well as prescriptions regarding rational choice (in decision theory).

The methodological basis for positive/normative distinction is rooted in the fact-value distinction in philosophy. A positive statement is an assertion about facts of the world, while normative statements express value judgments. The former describe the world as it is, while the latter talk about the world as it should be.[3]

  1. ^ Stanley Wong (1987). "positive economics," The New Palgrave: A Dictionary of Economics, v. 3, pp. 920-21
  2. ^ Paul A. Samuelson and William D. Nordhaus (2004). Economics, 18th ed., pp. 5-6 & [end] Glossary of Terms, "Normative vs. positive economics."
  3. ^ "Normative Economics". Business Dictionary. Archived from the original on 23 December 2007. Retrieved 9 October 2014.