Positive and normative statements
The importance of detecting bias in arguments
Whenever you are reading articles on current affairs it is important to be able to
distinguish between objective and subjective statements.
Often, the person writing an article has a particular argument to make and will include
subjective statements about what ought to be or what should be happening. Their
articles carry value judgements; they are trying to persuade you of the particular merits
or demerits of a policy decision. These articles may be wholly or partially lacking in
objectivity.
Positive Statements
Positive statements are objective statements that can be tested, amended or rejected by
referring to the available evidence. Positive economics deals with objective explanation
and the testing and rejection of theories. For example:
A fall in incomes will lead to a rise in demand for own-label supermarket foods
If the government raises the tax on beer, this will lead to a fall in profits of the
brewers.
The rising price of crude oil on world markets will lead to an increase in cycling
to work
A reduction in income tax will improve the incentives of the unemployed to find
work.
A rise in average temperatures will increase the demand for sun screen products.
Higher interest rates will reduce house prices
Cut-price alcohol has increased the demand for alcohol among teenagers
A car scrappage scheme will lead to fall in the price of second hand cars
A value judgement is a subjective statement of opinion rather than a fact that can be
tested by looking at the available evidence
Normative Statements
Normative statements are subjective statements rather than objective statements – i.e.
they carry value judgments. For example:
Pollution is the most serious economic problem
Unemployment is more harmful than inflation
The congestion charge for drivers of petrol-guzzling cars should increase to £25
The government should increase the minimum wage to £6 per hour to reduce
poverty.
The government is right to introduce a ban on smoking in public places.
The retirement age should be raised to 70 to combat the effects of our ageing
population.
Resources are best allocated by allowing the market mechanism to work freely
The government should enforce minimum prices for beers and lagers sold in
supermarkets and off-licences in a bid to control alcohol consumption
Focusing on the evidence is called adopting an empirical approach – evidence-based
work is becoming more and more important in shaping different government policies
and how much funding to give to each.
Activities:
1. Explain the difference between positive and normative statements. Give
examples to support your answer.
-positive statement=an objective statement which contains no personal views or
opinions they are fact based and can be tested with evidence
e.g. An increase investment would lead to long term economic growth
-normative statements=subjective and are based on opinions and personal
views these statements cannot be tested using evidence
e.g. firms should prioritize customer convenience over maximizing profits as
this would could lead to better reputation.
2. Explain why it is important for economists to understand the difference between
these kinds of statement.
Positive statements are based on factual evidence, these statements allow
economists to interpret data objectively which can help the business progress.
However normative statements on the other hand express opinions on what
should or could happen which could be used by economist in order to get a
better idea of different situations however these statements may lead to false
ideas as they are based on opinions and can not be tested as there is no
evidence. Overall differentiation between these two statements is crucial in order
to finalize a justified objective decision.
