Positive AnalysisDescriptive, factual statements about the world are referred to as positive statements by economists. The term "positive" isn't used to imply that economists always convey good news, of course, and economists often make very, well, negative positive statements. Positive analysis, accordingly, uses scientific principles to arrive at objective, testable conclusions.
Normative AnalysisOn the other hand, economists refer to prescriptive, value-based statements as normative statements. Normative statements usually use factual evidence as support, but they are not by themselves factual. Instead, they incorporate the opinions and underlying morals and standards of those people making the statements. Normative analysis refers to the process of making recommendations about what action should be taken or taking a particular viewpoint on a topic.
Examples of Positive vs. NormativeThe distinction between positive and normative statements is easily shows via examples. The statement
- The unemployment rate is currently at 9 percent.
- The unemployment rate is too high.
- The government must take action in order to reduce the unemployment rate.
How to Effectively Disagree With an EconomistPeople seem to like disagreeing with economists (and, in fact, economists often seem to enjoy disagreeing with one another), so it's important to understand the distinction between positive and normative in order to disagree effectively.
To disagree with a positive statement, one must bring other facts to the table or question the economist's methodology. In order to disagree with the positive statement about unemployment above, for example, one would have to make the case that the unemployment rate isn't actually 9 percent. One could do this either by providing different unemployment data or by performing different calculations on the original data.
To disagree with a normative statement, one can either dispute the validity of the positive information used to reach the value judgment or can argue the merits of the normative conclusion itself. This becomes a more murky type of debate, since there is no objective right and wrong when it comes to normative statements.
In a perfectly organized world, economists would be pure scientists who perform only positive analysis and exclusively convey factual, scientific conclusions, and policy makers and consultants would take the positive statements and develop normative recommendations. In reality, however, economists often play both of these roles, so it's important to be able to distinguish fact from opinion, i.e. positive from normative.