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Positive and Normative Economics: Meaning | Characteristics | Difference.




    Positive Economics


    Positive economics is the economics of 'what was,' what is' and 'what would be.' A positive statement is a statement about what really is, and that can be observed as true or false. Positive statements attempt to describe the world as it is. It is descriptive.

    The positive statements are capable of empirical verification. Empirical verification means verifying the truth or falsehood of the empirical evidence given in the statement. Through empirical verification, the degree of the truth in such statements can be determined. 

    A positive statement neither offers any suggestion about facts nor pass any value judgments. Positive statements can be true or false. 



    Examples:

    1. Workers received a pay increase above the rate of inflation last year. 
    Here empirical evidence is "received a pay rise," which qualifies for empirical verification.
    2. The population of India is 50 Crore.
    Whether the above example true or not, that is a matter of verification. 

    Characteristics of Positive Economics:


    1. Positive economics deals with economics issues related to past present and future.
    2. These statements are based on facts and figures related to past, present, or future.
    3. These facts and figures can be verified.
    4. These statements do not reflect any value judgment.

    Positive and Normative Economics
    Positive and Normative Economics


    Normative Economics


    Normative economics is the 'economics of what ought to be.' It deals with the opinions of the economists related to economic issues or economic problems. Different economists may offer different opinions on the solution to an economic problem. 
    Normative statement a statement about how things should be in a morale sense. These statements attempt to prescribe how the world should be.
    It is prescriptive.

    Normative statements prescribe 'what ought to be.' Its objective is to determine the norms or aims. These statements offer value judgment. A value judgment is a statement that implies a commendation or recommendation. These are mere opinions and are not verifiable for truth. 

    Examples: 

    Workers should receive a pay increase above the rate of inflation the year. 

    Doctors should be paid more than engineers.

    Characteristics of normative statements:


    1. These are the statement about how things should be in a morale sense.
    2. These statements lead to controversies and debates.
    3. These statements indicate opinions and they are not verifiable for truth.
    4. These statements prescribe 'what ought to be.'
    5. These statements involve value judgments.


    Difference between Positive and Normative Economics





        Positive Economics
         Normative  Economics
    1. Positive economics deals with economic issues related to past, present and future

    1. Statements of positive economics related to ‘ what was, what is and what would be.’
    2. Statements of positive economics may be true or false. 
    3. Facts and figures are verifiable for truth 
    4. Positive economics is concerned with explaining what really happens in the real world without making any judgement for what happens is desirable or not. 
    1. Normative economics deals with the opinions of the economists relate to economic issues or economic problems
    2. Statements of normative economics relate to what ought to be.’
    3. Normative statements cannot be termed as true or false. These statements only.
    4. Normative statements are not verifiable at all
    5. Normative economics is concerned with making judgements about whether one state of affairs is preferable to or better than another.




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