Principles of Macroeconomics / Unit 1 MAC 0028 worked example, 60 to 90 seconds
Positive or Normative
The idea
A positive statement describes the world as it is and can in principle be tested against evidence. A normative statement says how the world ought to be and rests on values, so evidence alone cannot settle it. To classify a statement, ask whether any measurement could show it false. If one could, the statement is positive, even if the measurement is hard and even if the statement turns out to be wrong. If no measurement could settle it, because the disagreement is about what matters rather than about what is, the statement is normative.
In practice
Worked example: a study finding that a new subway line would cost more to build than riders would save in travel time is positive, and could be checked. An argument that a wealthy country ought to extend unemployment payments is normative, and could not. A third, that raising the minimum wage reduces teenage employment, is positive and contested: economists disagree about the size of the effect, and the disagreement is about evidence.
Where people slip
Positive does not mean true, and normative does not mean worthless. A positive statement can be false, and much of the most important argument in economics is normative. The mistake to avoid is treating a normative claim as though evidence had settled it, or dismissing a positive claim because the answer is unwelcome.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
Unlocks
- Nothing yet depends on this.
Something wrong in this lesson? Flag it · Sources for Principles of Macroeconomics