Distinguish between positive and normative economics. Which one should be preferred and why

Positive Economics:

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  • Definition: Positive economics is concerned with describing and explaining economic phenomena as they are, without making value judgments or expressing opinions about whether they are good or bad.
  • Objective: It aims to provide objective, factual analysis based on observable data and verifiable statements.
  • Example: “An increase in the minimum wage will lead to a decrease in employment” is a positive economic statement. It does not express whether this outcome is desirable or undesirable; it focuses on the cause-and-effect relationship.

Normative Economics:

  • Definition: Normative economics involves making value judgments and expressing opinions about what economic policies or outcomes should be based on subjective criteria of what is considered desirable or ethical.
  • Objective: It aims to recommend policies or outcomes based on subjective judgments and opinions about what is considered good or bad.
  • Example: “The government should increase spending on education because it leads to a more equitable society” is a normative economic statement. It reflects a value judgment about the desirability of increased education spending.


  • Balanced Approach: Both positive and normative economics are essential components of economic analysis. Positive economics provides a factual foundation, while normative economics allows for discussions about policy implications and ethical considerations.
  • Value Neutrality: Positive economics is often considered more objective and scientific because it avoids subjective value judgments. It aims to provide a neutral analysis based on observable data.
  • Policy Guidance: Normative economics, on the other hand, guides policymakers by offering recommendations based on subjective values and goals. It helps in making decisions that align with societal preferences.
  • Ethical Considerations: While positive economics focuses on what is, normative economics addresses what ought to be. The inclusion of normative considerations is important when ethical or moral questions are involved in economic decision-making.

Overall Perspective:
A balanced approach that incorporates both positive and normative economics is generally preferred. Positive economics lays the groundwork for understanding economic phenomena objectively, while normative economics helps in making value-based policy decisions. The key is to be transparent about the distinction between descriptive analysis (positive) and value judgments (normative) to ensure clarity in economic discussions and policy formulation.