Difference between Positive and Normative Economics

difference between positive and normative economics

The basic difference between Positive Economics and Normative Economics is that Positive Economics deals with the economic issues related to past, present and future with facts and figures whereas Normative Economics deals with the opinions involving a value judgement of economists related to economic issues.

To know the difference between these two, we must clear the meaning of these terms:

Meaning of Positive Economics:-

Positive Economics refers to the study of economic issues which are subject to verification. The observations or statements which are related to past, present and future and can be verified by using figures and facts are the elements of positive economics. For instance,

a) On independence, poverty affected a large proportion of the population in India than now ( This statement refers to the past observation).

b) Approximately 25% of the population is poor (This statement refers to present observation)

c) The healthcare services provided by Government adds up in the public expenditure (This statement refers to future observation).

Meaning of Normative Economics:-

It refers to the study of economic issues which involve a value judgement, which is debatable. The different economist may offer different opinions carrying value judgements on the solution to an economic problem. For instance, 

a) Govt policy will bring an end to the problem of unemployment in the country.

b) Govt should provide basic facilities to all citizens of a country.

All these statements are elements of normative economics. These statements are only opinions and not verifiable for truth.

Chart of Difference between Positive Economics and Normative Economics:

Basis of Difference

Positive Economics

Normative Economics

Meaning It is the study of economic issues subject to verification. It refers to the study of economic issues which involve a value judgement.

Deals with

It deals with the economic issues related to past, present and future. It deals with the opinions of economists related to solutions for economic issues or problems.
Represents  The statements in Positive economics represent ‘what was’, ‘what is’ and ‘what would be’. The statements in Normative economics represent ‘what ought to be’.

Verification for truth

Here, facts and figures are used to verify the truth. These statements are not verifiable at all.

Value Judgement

It doesn’t involve value judgement or opinions. It involves value judgement and opinions by economists.

True or False Statements

These statements may be true or false. These statements can never be true or false as these include opinions only.

Examples

 “The Population of China is more than the population in India” It is a positive statement which is true and can be verifiable.

“Healthcare services should be available for all” It is a normative statement which involves opinion only.

Download the chart:-

If you want to download the chart please download the following image and PDF file:-

Difference between Positive and Normative Economics 1 296x300 - Difference between Positive and Normative Economics
Difference between Positive and Normative Economics
application pdf 150x150 - Difference between Positive and Normative Economics
Difference between Positive and Normative Economics

 

Conclusion:

Thus, these both statements are essential for making policies for a country, region, company, firm or institution. But most of the observations have indicated that while making public policy, normative economics is more considered when compared to positive economics.

 

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