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1.1.2 Positive and Normative Economics

There are two types of investigations in Economics. Both of these can influence economic decision making and policy.

Positive

The scientific or objective study.

  • Can be proven true or false, and
  • can be supported or refuted by evidence.

For example, "UK unemployment is 4.4%" - this is a positive statement as this can be validated with information from the ONS.

Normative

Concerned with value judgements, and subjective.

  • Cannot necessarily be proven true or false
  • Often simply reflects the opinions of others, potentially without factual basis

Examples

  • "The government should increase spending on education"

This is a very vague statement. Why should they increase spending? Would it provide any benefits? Any data suggesting bad education, therefore we should increase spending? etc.

  • "It is unfair for the government to reduce state benefits to the unemployed."

How is it unfair? Is there economic data to potentially show how reducing state benefits may increase deprivation? etc.