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If you decide to study AS Economics this year this will be some of the interesting introductory material

you will meet:

Positive and normative economics

A reminder:


Economics is a social science


Social refers to people, nations, communities and individuals. It concerns the choices people make and the influences and limitations there are upon those economic choices. Adam Smith: ‘political economy’.


Science is concerned with the realm of facts, observations, calculations, hypotheses and known laws concerning economic behaviour.


These two words cannot be meaningful separated in any description of economics, but it is helpful to distinguish them at certain points for the sake of


i)     Identifying priorities in economic decision making and


ii)    clarity in economic theory



The words positive and normative have a recent history:


Individual knowledge encouraged by the Reformation and the advent of modern science.


Philosophical divide of facts and values. Some argue e.g. the philosopher and economist Hume that values (religious and moral) have nothing to do with facts ( the realm of science). This is not the position taken here.


Nevertheless it is agreed that it is helpful to make the distinction.


Normative economics involves value choices


-something that we should or should not do e.g. destroy the rainforests, release more carbon into the atmosphere, look after the poor


-making the right choice. Faced with a set of statistics and economic facts politicians and economists may have to make a decision about what to do. Normative economics is concerned as to whether this was the right moral choice or not.


-Some economists argue there is an objective moral basis for making such decisions


-Good and right choices can be observed by the outcome for people and the environment. Again this is a normative economic point


Positive economics is concerned with the scientific value of evidence


-       gathering data, statistics and numbers  regarding the economic behaviour of people


-       a focus on measurement and evidence


-       gathering data and evidence and performing calculations to determine objective facts and provide descriptions of economic behaviour.


In the social science of economics positive and normative economics combine


e.g. If the government encounter a monopolist should they intervene to encourage competition?


This would depend upon the following calculation and judgement.


Is there a public good to be attained here?

What would that public good be?

What would the economic benefit be to the consumer?

To society?

Are we prepared to make the difficult choices to ensure the public good? 

Do we have the political will?

If you like this approach to Economics try some of these resources:

-Motivation: check out this fun video which reveals some discerning and intelligent truths about motivation.

- complete the survey mapping your stand towards 

market economics