Positive & Normative Statements
- Positive economics is concerned with objective statements of how a market or an economy works
- These positive economic statements are based on empirical evidence and tend to be statements of fact
- They can be proven to be true or false
- These are examples of positive economic statements
- The UK unemployment rate has fallen from 4% to 3.7% in the past three months
- Increasing the minimum wage last year in the UK resulted in improvements to wage inequality
- Prices in the UK have risen dramatically, partly due to the 20% increase in the price of oil
- Normative economics focuses on value judgements. These judgements are built around opinions and beliefs as to what the best economic policies or solutions may be
- These judgements are called normative economic statements
- Normative economic statements are what separate political parties and the different economic agendas they put forward
- These are examples of normative economic statements
- Every economy should aim to provide free healthcare for its citizens
- Corporation taxes in an economy should be higher than personal income taxes
- The best way to deal with a rise in crime is to employ more police
Exam Tip
Examiners will often assess your understanding of positive and normative economic statements in the MCQ questions. They do this by asking you to identify either the positive or negative statement in the list.
Normative statements often have the word 'should' in them (but not always). Positive statements usually include data that is hard to challenge. Any use of concrete data points towards the statement being a positive statement.
