O C H A P T E R !

t I ONOMK ISSUE S AND C ONCEPT

Box 1.2 Economic advice: positive and normative statements

Economists give advice on a wide variety of topics. If you
read a newspaper, watch television news, or listen to com
mentanes on the radio you will often notice some economist'sopinions being reported. Perhaps it ison the prospects
for unemployment, inflation, or interest rates, on some new
tax, or on the case tor privatization or regulation of an
industry
Advice comes in two broad types: normative and positive.
A commentator might advise that the government ought to
try harder to reduce unemployment or to preserve the envi
ronment. This is normative advice. He or she may be using
their expert knowledge to come to conclusions about the
costs of various unemployment-reducing or environment
saving schemes, but when it is said that the government
ought to do something, this involves making judgments
about the value of the various things that the government
could do with its limited resources. Advice that depends on
a value judgment is normative it tells others what they
ought to do.
Another type of advice is illustrated by the statement 'If
the government wants to reduce unemployment, then this
is an effective way of doing so'. This is positive advice. It
does not rely on a judgment about the value of reducing
unemployment. Instead the adviser is saying, 'Ifthis is what
you want to do, then here are ways of doing it.
It is difficult to have a rational discussion of issues if
positive and normative issues are confused. Much of the
success of modern science depends on the ability of scien
tists to separate their views on what does, or might, happen
in the world, from their views on what they would like to
happen. For example, until the eighteenth century almost
everyone believed that the Earth was only a few thousand
years old. Evidence then began to accumulate that the Earth
was thousands of millions of years old. This evidence was
hard for most people to accept since it ran counter to a literal
reading of many religious texts. Many did not want to believe
the evidence. Nevertheless, scientists, many of whom were
religious, continued their research because they refused to
allow their feelings about what they wanted to believe affect
their search for the truth. Eventually, scientists came to
accept that the Earth is about 4,500 million years old.

All six statements listed in Table 1.1 as positive assert

things about the nature of the world in which we live. In
contrast, the six statements listed as normative require
value judgments.
Notice two things about the positive/normative distinc
tion. First, positive statements need not be true. Statement
D is almost certainly false. Yet it is positive, not normative.
Secondly, the inclusion of a value judgment in a statement
does not necessarily make the statement normative. State
ment E is about the preferences that people hold; that is,
about their value judgments. We could, however, check to
see if people really do worry more about inflation than
unemployment. We can observe their answers to survey
questions, and we can observe how they vote for parties that
Distinguishing what is true from what we would like to be, give different priority to these objectives. There is no need
or what we feel ought to be, true depends to a great extent to introduce a value judgment in order to check the validity
on being able to distinguish between positive and normativeof the statement itself.
You can decide for yourself why each of the other state
statements.
ments is either positive or normative. Remember to apply
Normative statements depend on value judgments. They
the two tests.
involve issues of personal opinion, which cannot be settled
1) Is the statement only about actual or alleged facts? If
by recourse to facts. In contrast, positive statements do not
so, it is positive.
involve value judgments. They are statements about what
is, was, or will be; that is, statements that are about matters
of fact.

2) Are value judgments necessary to assess the truth of

the statement? If so, it is normative.