Positive statements and normative judgements

Overview

Statement positive rather than normative and why words such as 'fair'.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What makes a statement positive rather than normative?

   Model answer

   A positive statement is a claim about what is, was or will be, and it can in principle be tested against evidence. A normative statement is a claim about what ought to be and rests on a value judgement, so no amount of data can settle it. The test is not whether the statement is true but whether evidence could decide the matter.

2. 2

   Classify this statement and justify your answer: 'A rise in the tax on petrol reduces the quantity of petrol bought.'

   Model answer

   This is positive. It is a factual claim about cause and effect that could be checked by collecting data on petrol taxes and sales. Whether it turns out to be right or wrong does not change its classification.

3. 3

   Classify this statement and justify your answer: 'The government should tax high earners more heavily to reduce inequality.'

   Model answer

   This is normative. The word 'should' signals a value judgement about what is desirable. Economics can estimate how much revenue such a tax would raise and how it would affect incentives, but it cannot establish that reducing inequality this way is the right thing to do.

4. 4

   A student says a positive statement must be true. Explain why this is wrong.

   Model answer

   Positive statements can be false. 'Unemployment in the UK is currently forty per cent' is a positive statement because evidence can decide it, and the evidence shows it is false. The defining feature of a positive statement is testability, not accuracy.

5. 5

   Why is the distinction between positive and normative economics useful when evaluating a government policy?

   Model answer

   It separates the parts of the argument that evidence can settle from the parts that depend on values. Whether a minimum wage rise raises unemployment among young workers is a positive question that data can address, while whether the resulting trade-off between pay and jobs is acceptable is normative. Keeping the two apart stops disagreements about values from being disguised as disagreements about facts.

6. 6

   Identify the positive and the normative element in this claim: 'Raising the state pension by five per cent would cost eight billion pounds, which is money better spent on hospitals.'

   Model answer

   The estimated cost of eight billion pounds is positive, because it can be checked against public spending figures. The judgement that the money would be better spent on hospitals is normative, because it ranks two uses of public money according to a value about what matters most.

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