Positive Economics Vs. Normative Economics

 Positive economics and normative economics are two branches of economics that serve different purposes in the analysis of economic phenomena.

 

**Positive Economics:**

1. Objective:

Positive economics is concerned with the objective, descriptive analysis of economic phenomena. It aims to provide an unbiased and factual explanation of how the economy works without making value judgments.

2. Statements:

Positive economic statements are verifiable and testable. They focus on what is, rather than what ought to be. These statements can be proved or disproved based on empirical evidence.

3. Examples:

 "An increase in the minimum wage leads to a decrease in employment" is an example of a positive economic statement because it can be tested and validated with data.

 

**Normative Economics:**

1. Objective:

 Normative economics, in contrast, involves subjective judgments about what ought to be. It deals with value judgments, opinions, and recommendations on how economic policies and outcomes should be.

2. Statements:

Normative economic statements express opinions or preferences and are not easily verifiable or testable. They involve value judgments and reflect individual or societal beliefs about desirable economic conditions.

3. Examples:

The government should increase spending on education" is a normative economic statement because it expresses a value judgment about the desirability of a particular policy.

 

In summary, positive economics focuses on providing factual and objective explanations of economic phenomena, relying on empirical evidence, and avoiding value judgments. Normative economics, on the other hand, involves subjective opinions and recommendations about what economic policies or outcomes should be pursued based on individual or societal values. Both branches contribute to a comprehensive understanding of economic issues, with positive economics providing the foundation of objective analysis and normative economics offering insights into the policy implications of different economic choices.