S6 POSITIVE AND NORMATIVE ECONOMICS

• Economists are asked to explain the world as scientists and improve the world as policy advisers. Positive analysis deals with factual statements trying to explain the world. Normative analysis deals with value judgments trying to improve the world
• Positive statement—an objective, testable statement that describes what happens and why it happens.
• Normative statement—a subjective, contestable statement that attempts to describe what should be done. • For example, should the government give “free” prescription drugs to seniors? Or should the government increase spending in the space program?
• Disagreement is Common in Most Disciplines • The majority of disagreements in economics stem from normative issues. • However, there is some disagreement over positive analysis—there may be mixed empirical evidence or insufficient information.
• Most economists agree on a wide range of issues including the effects of rent control, import tariffs, export restrictions, the use of wage and price controls to curb inflation, and the minimum wage.
• The study of economics helps improve our understanding of these concerns
• Economics gives us clues on how to intelligently evaluate options
• Economics helps develop a disciplined method of thinking about problems.
• The economic way of thinking. –Causes those in many types of fields to ask the right kind of questions.
• Economics won’t necessarily make you richer, but it may keep you from making some decisions that would make you poorer.