In the
philosophy of economics, a descriptive or positive statement is an assertion about
facts of the world, while prescriptive or normative statements express
value judgments. The former describe the world ''as it is'', while the latter talk about the world ''as it should be''. The methodological basis for positive/normative distinction is rooted in the
fact-value distinction in philosophy.
Economics is often divided into positive and normative economics. Positive economics focuses on the description, quantification and explanation of economic phenomena.
[ Stanley Wong (1987). "positive economics," The New Palgrave: A Dictionary of Economics, v. 3, pp. 920-21] Normative statements about economics often take the form of discussions about
fairness and what the outcome of the economy or goals of
public policy ''ought to be'',
Paul A. Samuelson
Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist who was the first American to win the Nobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, the Swedish Royal Academies stated that he "h ...
and William D. Nordhaus
William Dawbney Nordhaus (born May 31, 1941) is an American economist, a Sterling Professor of Economics at Yale University, best known for his work in economic modeling and climate change, and one of the 2 recipients of the 2018 Nobel Memoria ...
(2004). '' Economics'', 18th ed., pp. 5-6 & ndGlossary of Terms, "Normative vs. positive economics." as well as prescriptions regarding
rational choice, as studied in
decision theory.
Definitions
Positive economics as a
science concerns the investigation of economic
behavior
Behavior (American English) or behaviour (British English) is the range of actions and mannerisms made by individuals, organisms, systems or artificial entities in some environment. These systems can include other systems or organisms as wel ...
.
[ Lionel Robbins (1932). '' An Essay on the Nature and Significance of Economic Science''.] It deals with empirical facts as well as cause-and-effect behavioral relationships and emphasizes that
economic theories
Economics () is the social science that studies the production, distribution, and consumption of goods and services.
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyze ...
must be consistent with existing observations and produce precise,
verifiable
Verify or verification may refer to:
General
* Verification and validation, in engineering or quality management systems, is the act of reviewing, inspecting or testing, in order to establish and document that a product, service or system meets ...
predictions about the phenomena under investigation.
[ Milton Friedman (1953). " The Methodology of Positive Economics," ''Essays in Positive 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
Value or values may refer to:
Ethics and social
* Value (ethics) wherein said concept may be construed as treating actions themselves as abstract objects, associating value to them
** Values (Western philosophy) expands the notion of value beyo ...
judgments. 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.
An example of a normative economic statement is as follows:
:: ''The price of milk should be $6 a gallon to give dairy farmers a higher standard of living.''
This is a normative statement, because it reflects value judgments. This specific statement makes the judgment that farmers deserve a higher living standard and that family farms ought to be saved.
Some earlier technical problems posed in
welfare economics have had major impacts on work in applied fields such as
resource allocation,
public policy, social indicators, and
inequality and poverty measurement.
History
Since its inception as a discipline, economics has been criticized for insufficiently separating prescriptive from descriptive statements
and also for excessively separating prescriptive from descriptive statements.
The field's current emphasis on positive economics originated with the
positivist movement of Auguste Comte and with
John Stuart Mill
John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, Member of Parliament (MP) and civil servant. One of the most influential thinkers in the history of classical liberalism, he contributed widely to ...
's introduction of
Hume's fact-value distinction to define the science and art of economics in
A System of Logic.
which was introduced into the field by
John Stuart Mill
John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, Member of Parliament (MP) and civil servant. One of the most influential thinkers in the history of classical liberalism, he contributed widely to ...
and was further developed by
John Neville Keynes in the 1890s.
John Neville Keynes's ''The Scope and Method of Political Economy'' defined positive economics as the science of "what is" as compared to normative economics, the study of "what ought to be".
Keynes was not the first person to make the distinction between positive and normative economics but his definitions have become the standard in economics teaching.
The scientific or positive aspects of economics were emphasized by many early-to-mid 20th century economists in an attempt to prove economic theories could answer questions with the same scientific methodology as the physical sciences.
The fierce commentary of
Lionel Robbins in the 1930s, who argued that normative economics was wholly unscientific and should therefore be cast out of the field, were particularly influential for a time.
Robbins Robbins may refer to:
People
* Robbins (name), a surname
Fictional characters
* Al Robbins, medical doctor in ''CSI: Crime Scene Investigation''
* Arizona Robbins, surgeon in ''Grey's Anatomy''
* Ashley Mizuki Robbins, protagonist in the video ...
's 1932 "
Essay on the Nature and Significance of Economic Science
Lionel Robbins' ''Essay'' (1932, 1935, 2nd ed., 158 pp.) sought to define more precisely economics as a science and to derive substantive implications. Analysis is relative to "accepted solutions of particular problems" based on best modern practi ...
" argued economics should take as its subject matter attempts to achieve a given end with limited resources, and should not take a point of view on which ends should or should not be pursued. Robbins was instrumental in promoting the fact-value distinction in economics and insisting that ethical or value judgments should not be a part of the discipline,
and by the 1950s some economists even asserted that
Arrow's impossibility theorem proved any attempts to construct normative standards in economics were doomed to fail.
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.
By contrast,
Friedman
Friedman, Friedmann, and Freedman are surnames of German origin, and from the 17th century were also adopted by Ashkenazi Jews. It is the 9th most common surname in Israel (8th among Jews) and most common exclusively Ashkenazi name.
They may refer ...
in an influential 1953
essay emphasized that positive and normative economics could never be entirely separated, because of their relationship with economic policy. Friedman argued about economic policy are primarily due to an inability to agree about the likely consequences of a piece of legislation. As economics developed, Friedman believed that it would become increasingly possible to derive undisputed results about positive economic statements and that this would help to make clear judgments about the best ways to achieve normative goals.
According to Friedman, the ultimate goal of a positive science is to develop a "theory" or "hypothesis" that makes meaningful predictions of a phenomenon that is not yet examined. Friedman states that sometimes it is a ""language" that designed to promote "systematic and organised methods of reasoning" and in part, "It is a body of substantive hypotheses designed to abstract essential features of complex reality."
Criticism
The logical basis of such a relation as a
dichotomy
A dichotomy is a partition of a whole (or a set) into two parts (subsets). In other words, this couple of parts must be
* jointly exhaustive: everything must belong to one part or the other, and
* mutually exclusive: nothing can belong simulta ...
has been disputed in philosophical literature. Such debates are reflected in discussion of
positive science.
Hilary Putnam
Hilary Whitehall Putnam (; July 31, 1926 – March 13, 2016) was an American philosopher, mathematician, and computer scientist, and a major figure in analytic philosophy in the second half of the 20th century. He made significant contributions ...
has criticized the foundation of the positive/normative dichotomy from a linguistic perspective, arguing that it is not possible to completely separate "value judgments from statements of facts".
Many normative value judgments are held conditionally, to be given up if facts or knowledge of facts changes, so that a change of values may be purely scientific. Welfare economist
Amartya Sen distinguishes ''basic (normative) judgments'', which do not depend on such knowledge, from ''nonbasic'' judgments, which do.
Bryan Caplan
Bryan Douglas Caplan (born April 8, 1971) is an American economist and author. Caplan is a professor of economics at George Mason University, research fellow at the Mercatus Center, adjunct scholar at the Cato Institute, and former contributor ...
and
Stephen Miller argue the dichotomy in
economics has been greatly overstated, in that many policy disagreements often described as value judgments are simply disagreements about facts. They cite evidence showing that descriptive statements have a strong effect on policy prescriptions, and that
economics education tends to substantially affect both.
External links
Essays in Positive Economics by Milton Friedman* Milton Friedman (
9531966)
"The Methodology of Positive Economics,"excerpts from Friedman's essay
See also
*
Distribution (economics)
In economics, distribution is the way total output, income, or wealth is distributed among individuals or among the factors of production (such as labour, land, and capital). In general theory and in for example the U.S. National Income and Prod ...
*
Economic ideology
*
Is-ought problem
*
Justice (economics)
*
Normative science
*
Positive economics
*
Social welfare function
*
Social choice theory
*
Welfare economics
*
Economic progressivism
References
*
Andrew Caplin and Andrew Schotte, ed. (2008). ''The Foundations of Positive and Normative Economics: A Handbook'', Oxford
Descriptionan
preview.*
Milton Friedman (1953). "
The Methodology of Positive Economics," ''Essays in Positive Economics''.
*
Daniel M. Hausman
Daniel M. Hausman (born March 27, 1947 in Chicago, Illinois) is an American philosopher. His research has focussed primarily on methodological, metaphysical, and ethical issues at the boundaries between economics and philosophy. He is currently ...
and Michael S. McPherson (1996). ''Economic Analysis and Moral Philosophy'', "Appendix: How could ethics matter to economics?", pp. 211–20:
:: A.2: Objection 2: Positive economics is value-free
:: A.3: How positive economics involves morality
*
John Neville Keynes (1891)
''The Scope and Method of Political Economy''*
Richard G. Lipsey (2008). "positive economics."
The New Palgrave Dictionary of Economics''. Second Edition
Abstract.'
*
Gunnar Myrdal (1954
929
Year 929 ( CMXXIX) was a common year starting on Thursday (link will display the full calendar) of the Julian calendar.
Events
By place
Europe
* January 16 – Emir Abd-al-Rahman III of Córdoba proclaims himself caliph and create ...
. ''The Political Element in the Development of Economic Theory'', trans. Paul Streeten (Cambridge, MA: Harvard University Press).
*
Lionel Robbins (1932). ''
An Essay on the Nature and Significance of Economic Science''.
*
Paul A. Samuelson
Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist who was the first American to win the Nobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, the Swedish Royal Academies stated that he "h ...
(1947, Enlarged ed. 1983). ''
Foundations of Economic Analysis''
* Stanley Wong (1987). “positive economics," The
New Palgrave: A Dictionary of Economics, v. 3, pp. 920–21.
*
*
*
Amartya K. Sen
Amartya Kumar Sen (; born 3 November 1933) is an Indian economist and philosopher, who since 1972 has taught and worked in the United Kingdom and the United States. Sen has made contributions to welfare economics, social choice theory, economic ...
(1970), ''Collective Choice and Social Welfare''. "5.3 Basic and Nonbasic Judgments" & "5.4 Facts and Values", pp. 59–64.
*
Andrew Caplin and Andrew Schotte, ed. (2008). ''The Foundations of Positive and Normative Economics: A Handbook'', Oxford
Descriptionan
preview.* Marc Fleurbaey (2004). "Normative Economics and Theories of Distributive Justice", ''The Elgar Companion to Economics and Philosophy'', J.B. Davis and J. Runde, ed., pp
132-58.* _____ (2008). "Ethics and economics", ''
The New Palgrave Dictionary of Economics''
Abstract.* Milton Friedman (1953). "
The Methodology of Positive Economics", ''Essays in Positive Economics''
*
John C. Harsanyi (1987), “Value judgments", ''The
New Palgrave: A Dictionary of Economics'', v. 4, pp. 792–93
*
Daniel M. Hausman
Daniel M. Hausman (born March 27, 1947 in Chicago, Illinois) is an American philosopher. His research has focussed primarily on methodological, metaphysical, and ethical issues at the boundaries between economics and philosophy. He is currently ...
and Michael S. McPherson (1996). ''Economic Analysis and Moral Philosophy'', Cambridge: Cambridge University Press.
* Phillipe Mongin (2002). "Is There Progress in Normative Economics?" in Stephan Boehm ''et al.'', eds., ''Is There Progress in Economics?'', pp
145-170.* Stanley Wong (1987). “Positive economics", The ''New Palgrave: A Dictionary of Economics'', v. 3, pp. 920–21.
* doi:10.4324/9781315457932, Silvestri P. (ed.), L. Einaudi, ''On Abstract and Historical Hypotheses and on Value judgments in Economic Sciences'', Critical edition with an Introduction and Afterword by Paolo Silvestri, Routledge, London - New York, 2017. DOI: https://doi.org/10.4324/9781315457932.
*
Positive vs. Normative Economics Economae: An Encyclopedia
{{DEFAULTSORT:Positive Statement
Statements
Philosophy of social science