Economics as a Positive and Normative Science

 

a.      Economics as a Positive Science

A positive science is that which deals the things as they happen in reality. It explains what is, what was and what will be. The concept of positive economics was introduced by Classical Economists like Adam Smith, J.B Say, Ricardo and modern economists Lionel Robbins. Economics is a positive science because it studies cause and effect relationship between economic phenomena. For eg: the law of demand studies the cause and effect relationship between price and quantity demand for the commodity.

b.     Economics as a Normative Science

A normative science is that which studies things as they should be. It is related to the criteria of “what ought to be”. Economics cannot be separated from the normative aspect. Normative economics is the branch of economics that expresses value or normative judgement about economic fairness. The concept of normative economics was developed by Neo-classical economist Alfred Marshall. The main aim of economics is the explanation of the general causes on which the material welfare of human beings depend. Economists offer valuable advice to curb the economic ills from the world. It is the duty of economists to make a careful study of different economic problems and suggest ways and means to solve these problems. Normative economics has subfields that provide further scientific study including social choice theory, cooperative game theory and mechanism design.

For eg: An example of a normative economic statement is “the price of milk should be Rs 30 a gallon to give dairy farmers a higher standard and to save the family firm.” It is normative statement because it reflects value judgements and explains what should be done.

Difference between Positive Economics and Normative Economics:

Positive Economics	Normative Economics
a.It expresses what it is.	i.It expresses what should be.
b.It is based on facts.	ii.It is based on ethics.
c.It deals with actual/realistic situation.	iii.It deals about solving the actual/realistic problem.
d.It can be verified with actual data.	iv. It cannot be verified with actual data.
e.It deals with how an economic problem is solved.	v.It deals with how an economic problem should be solved.
f.In this value, judgments are not given.	vi.In this value, judgements are given.
For eg: a.What determines the price rise? b.Government has adopted policies to reduce unemployment	For eg: a.What is a fair price rise? b.Unemployment is worse than inflation.