- peteclimbs wrote:
- Abracadabra wrote:
- Everyone needs a basic understanding of economics....otherwise, the US of A will be lost without a shoot being fired!!!
But what do you do when one economist makes a statement and another tells you the exact opposite? Both are convinced the other one is wrong. How do you know which one to believe?
That is an excellent question.
The reason for the opposite answers usually depends on whether the economist is acting as a scientist or as a policy adviser.
THE ECONOMIST AS SCIENTIST
Economists try to address their subject with a scientist’s objectivity. They approach the study of the economy in much the same way a physicist approaches the study of matter and a biologist approaches the study of life: They devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
THE ECONOMIST AS POLICY ADVISER
Often, economists are asked to explain the causes of economic events. Why, for example, is unemployment higher for teenagers than for older workers? Sometimes, economists are asked to recommend policies to improve economic outcomes. What, for instance, should the government do to improve the economic well-being of teenagers? When economists are trying to explain the world, they are scientists. When they are trying to help improve it, they are policy advisers.
POSITIVE VERSUS NORMATIVE ANALYSIS
To help clarify the two roles that economists play, let’s examine the use of language. Because scientists and policy advisers have different goals, they use language in different ways.
For example, suppose that two people are discussing minimum-wage laws. Here are two statements you might hear:
POLLY: Minimum-wage laws cause unemployment.
NORM: The government should raise the minimum wage.
Ignoring for now whether you agree with these statements, notice that Polly and Norm differ in what they are trying to do. Polly is speaking like a scientist: She is making a claim about how the world works. Norm is speaking like a policy adviser: He is making a claim about how he would like to change the world.
In general, statements about the world are of two types. One type, such as Polly’s, is positive. Positive statements are descriptive. They make a claim about how the world is. A second type of statement, such as Norm’s, is normative. Normative statements are prescriptive. They make a claim about how the world ought to be.
positive statements
claims that attempt to describe the world as it is
normative statements
claims that attempt to prescribe how the world should be
A key difference between positive and normative statements is how we judge their validity. We can, in principle, confirm or refute positive statements by examining evidence. An economist might evaluate Polly’s statement by analyzing data on changes in minimum wages and changes in unemployment over time. By contrast, evaluating normative statements involves values as well as facts. Norm’s statement cannot be judged using data alone. Deciding what is good or bad policy is not just a matter of science. It also involves our views on ethics, religion, and political philosophy.
Positive and normative statements are fundamentally different, but they are often intertwined in a person’s set of beliefs. In particular, positive views about how the world works affect normative views about what policies are desirable. Polly’s claim that the minimum wage causes unemployment, if true, might lead her to reject Norm’s conclusion that the government should raise the minimum wage. Yet normative conclusions cannot come from positive analysis alone; they involve value judgments as well.
As you study economics, keep in mind the distinction between positive and normative statements because it will help you stay focused on the task at hand. Much of economics is positive: It just tries to explain how the economy works. Yet those who use economics often have normative goals: They want to learn how to improve the economy. When you hear economists making normative statements, you know they are speaking not as scientists but as policy advisers.Principles of Economics, 6th Edition. N. Gregory Mankiw.