1.5 Economics – Social Science & Policy Tool

Economics is not a form of moral instruction. Rather, it seeks to describe economic behavior as it actually exists. Philosophers draw a distinction between positive statements, which describe the world as it is, and normative statements, which describe how the world should be. 

• A statement of fact or a hypothesis is a positive statement. Although people often disagree about positive statements, such disagreements can ultimately be resolved through investigation such as “the unemployment rate in Canada is 6 percent,” or “It is raining outside” or “Microsoft is the largest producer of operating systems for personal computers in the world.” They may be true or false, but we can test them, at least in principle.

• There is another category of assertions, however, for which investigation can never resolve differences. A normative statement is one that makes a value judgment. Such a judgment is the opinion of the speaker; no one can “prove” that the statement is or is not correct. Here are some examples of normative statements in economics: “We ought to do more to help the poor.” “People in Canada should save more.” “The government should raise minimum wages.” The statements are based on the values of the person who makes them. They cannot be proven false.

When economists are trying to explain the world, they are scientists. They use positive statements to describe the world and when they are trying to change the world, they are policy advisors. They use normative statements about how the world should be

Attribution

“Reading: Positive and Normative Statements” in Microeconomics by Lumen Learning is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

“2.3 Confronting Objections to the Economic Approach” in Principles of Economics 2e by Open Stax is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.