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Positive economics
Positive economics (as opposed to normative economics) is the branch of
economics that concerns the description, quantification and explanation of
economic phenomena.[1] It focuses on facts and cause-and-effect behavioral
relationships and notes that economic theories[2] must be consistent with
existing observations. Positive economics as science, concerns analysis of
economic behavior,[3] to determine what is. Positive economics was once known
as value-free (German: wertfrei) economics. Examples of positive economic
statements are "the unemployment rate in France is higher than that in the
United States," or “an increase in government spending would lower
the unemployment rate.” Either of these is potentially falsifiable, and
may be contradicted by evidence. Positive economics as such avoids economic
value judgements. For example, a positive economic theory might describe how
money supply growth affects inflation, but it does not provide any instruction
on what policy ought to be followed. This contrasts normative economic
statements in which an opinion is given. For example, “Government spending
should be increased” is a normative statement. Paul Samuelson's
Foundations of Economic Analysis (1947) lays out the standard of operationally
meaningful theorems through positive economics. Positive economics is commonly
deemed necessary for the ranking of economic policies or outcomes as to
acceptability. John Neville Keynes (1891)[4] and Milton Friedman, in an
influential 1953 essay,[5] elaborated on the distinctions between positive and
normative economics. Positive economics is sometimes defined as the economics
of "what is", whereas normative economics discusses "what ought
to be".
The methodological basis for a positive/normative distinctions rooted in the
fact-value distinction in philosophy. The principal proponents of such
distinctions originate with David Hume and G. E. Moore. The logical basis of
such a relation as a dichotomy has been disputed in the philosophical
literature. Such debates are reflected in discussion of positive science and
specifically in economics, where critics, such as Gunnar Myrdal (1954), and
proponents of Feminist Economics such as Julie A. Nelson,[6] Geoff Schneider
and Jean Shackelford,[7] and Diana Strassmann,[8] dispute the idea that
economics can be completely neutral and agenda-free.
See also:
Consumer theory Distribution (economics) Economic methodology Feminist
economics Normative economics Philosophy of economics Production possibilities
frontier Supply and demand
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