1.1.2 Positive and normative economic statements

POSITIVE

• a statement which is objective and made without any obvious value judgements

• it can be tested to be proven or disproven and they’re often expressed in the form of a hypothesis

• statements of the future can be positive if they can proven or disproven in the future

• E.G.- “raising taxes will lead to an increase in tax revenue”

• important because they can be tested to see whether economic ideas are correct

NORMATIVE

• a statement which is subjective and based on value judgements, so can’t be proven or disproven.

• usually includes words like maybe, should etc. or says one action is better than another

• E.G.- “the government should increase taxes”

• important because value judgements influence decision-making and gov policy

VALUE JUDGEMENTS

• economists use positive statements to backup normative statements

• value judgements can influence economic decision making and policy- diff economists make diff judgements based on the same statistics

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