Positive and Normative Economics

Positive Economics - the scientific or objective study of the allocation of resources.

Positive Statement - a statement which can be supported or refuted by evidence.

Normative Economics - the study and presentation of policy prescriptions involving value judgements about the way in which scarce resources are allocated.

Normative Statement - a statement which cannot be supported or refuted because it is a value judgement.

• Positive economics is interested in how economies and markets work.
• Normative economics is interested in value judgements on economics.
• Economists are interested in both positive and normative statements.
• They wish to learn how economics works and influence policy debates.

• In September 2014, the Scottish independence vote occurred with a no result.
• John Barstow, from the Executive Council of the trade union Usdaw, said that a no verdict was 'excellent news for all of our livelihoods'.
• John Barstow in his letter to the Financial Times ultimately said that a vote for independence would have been bad for both Scotland and the UK.
• These are examples of value judgements that would have influenced economic policy by swaying opinion in the vote.