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Positive Vs. Normative Economics: What Should You Know About Them?
Last Updated on: October 17th, 2024
The world’s economics has existed since the 3rd century BCE, even before Jesus Christ came to the world. Since then, it has been a subject that is studied objectively and subjectively to understand production and consumption.
And as economics started to develop itself, it divided itself into positive and normative economics, which studies the objective and subjective parts of financial structure.
Therefore, today’s topic of discussion is the boxing match between positive and normative economics. It is because there is a huge difference between authors and experts to suggest which one is better.
Consequently, you are right. I won?t do that and focus on just knowing them.
Positive Economics
Positive economics is a branch of economics that is dependent on defining the situation through quantifiable numbers. As it tries to depict what it sees rather than waiting for if and buts or assessing between the lines things.
It straightforwardly bases its assumption based on facts and numbers. That is why it is said to be objective to discuss the consumption and production of people or the state. Further, it comes with precise and measurable statements, which helps to understand them.
The present branch of economics engages itself to describe the cause-and-effect relationship and behavioral associations and tests various economic theories. For example, with the help of positive economics, you can measure unemployment, inflation, literacy rate, etc.
Thus, all you will find is a description of what’s happening in the surroundings clearly and crisply.
Why Is Positive Economics Important?
In the field of economics, positive economics is important as it shows factual data on the conditions that are happening in your state. For example, how would you know the unemployment rate in a country? Is it through objective data? Yes, that?s how you see the situation’s existing condition.
This helps policymakers and the ruling government to take necessary steps to ensure that they can curb the issue and offer a better policy for the development of people. Positive economics is effective in assessing the condition of minorities in the state.
Further, you can use positive economics to study past historical events and offer a realist opinion on what happened in that era or century. That?s how people research history.
Therefore, if you lack knowledge of positive economics, then you can visit the website of Ace Your Econs, the best private Economics tuition in Singapore. They can develop your understanding of economics.
Normative Economics
Well, the other side of the economics branch offers subject predictions to help you assume or predict events. Normative word in normative economics means normal or collect.
It is the ideological assumptions or theories that discuss the events or situations occurring in the surroundings. Here the perspective or opinions of people matter as their judgment creates a sense of understanding of the development of projects happening in the world.
Thus, to understand it, it is the different political commentaries you hear on TV or read in the newspaper regarding certain policies. Hence, the desires and emotions of the people are reflected in grasping various financial occurrences in the state.
For example, there is a great debate between the Marxist view of economics and the capitalist way of thinking.
Note: Both base their perspective on commodity production and consumption.
Why Is Normative Economics Important?
Normative economics is important, as it helps us understand an individual’s economic condition and the basis of their commentary. The concepts like class become clearer when you put normative understanding in place.
That is why you will hear the concept of positive discrimination, which means giving extra benefits to minorities to uplift themselves in society.
Further, with the help of normative economics, you will realize why governments in Australia, Canada, and the USA are investing in minority development.
Consequently, it can birth new ideas and concepts by keeping societal and psychological assumptions in mind. Also, affect the policy-making process of the government.
The Bottom Line
In order to understand economics, there is a need for normative and positive economics. It can add importance to the numbers we get. In other words, you can theorize the social evils and causes existing in the world.
Thus, it enhances your economic understanding of the world.
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