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Normative economics
 
 
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Normative economics is the branch of economics
Economics

File:Ballard Farmers' Market - vegetables.jpgEconomics is the Social sciences that studies the Production theory basics, Distribution , and Consumption of Good and Service ....
 that incorporates value
Value theory

Value theory encompasses a range of approaches to understanding how, why, and to what degree humans should or do value things, whether the thing is a person, idea, object, or anything else....
 judgments (that is, normative
Norm (philosophy)

Norms are Sentence s or sentence Meaning with practical, i. e. action-oriented import, the most common of which are commands, permissions, and prohibitions....
 judgements) about what the economy ought to be like or what particular policy
Policy

A policy is typically described as a deliberate plan of action to guide decisions and achieve rational outcome. However, the term may also be used to denote what is actually done, even though it is unplanned....
 actions ought to be recommended to achieve a desirable goal. Normative economics looks at the desirability of certain aspects of the economy. It underlies expressions of support for particular economic policies.

It is common to distinguish normative economics ("what ought to be" in economic matters) from positive economics
Positive economics

Positive economics is the branch of economics that concerns the description and explanation of economic phenomena . It focuses on facts and cause-and-effect relationships and includes the development and testing of economic theory....
 ("what is").






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Normative economics is the branch of economics
Economics

File:Ballard Farmers' Market - vegetables.jpgEconomics is the Social sciences that studies the Production theory basics, Distribution , and Consumption of Good and Service ....
 that incorporates value
Value theory

Value theory encompasses a range of approaches to understanding how, why, and to what degree humans should or do value things, whether the thing is a person, idea, object, or anything else....
 judgments (that is, normative
Norm (philosophy)

Norms are Sentence s or sentence Meaning with practical, i. e. action-oriented import, the most common of which are commands, permissions, and prohibitions....
 judgements) about what the economy ought to be like or what particular policy
Policy

A policy is typically described as a deliberate plan of action to guide decisions and achieve rational outcome. However, the term may also be used to denote what is actually done, even though it is unplanned....
 actions ought to be recommended to achieve a desirable goal. Normative economics looks at the desirability of certain aspects of the economy. It underlies expressions of support for particular economic policies.

It is common to distinguish normative economics ("what ought to be" in economic matters) from positive economics
Positive economics

Positive economics is the branch of economics that concerns the description and explanation of economic phenomena . It focuses on facts and cause-and-effect relationships and includes the development and testing of economic theory....
 ("what is"). But many normative (value) judgments are held conditionally, to be given up if facts or knowledge of facts changes, so that a change of values may be purely scientific (Sen, 1970, p, 61). This undermines the common distinction (Wong, 1987, p. 923). But Sen distinguishes basic (normative) judgments, which do not depend on such knowledge, from nonbasic judgments, which do. He finds it interesting to note that "no judgments are demonstrably basic" while some value judgments may be shown to be nonbasic. This leaves open the possibility of fruitful scientific discussion of value judgments (Sen, 1970, pp. 63-64).

To illustrate, an example of a normative economic statement is as follows:

  • The price of milk should be $6 a gallon to give dairy farmers a higher living standard and to save the family farm.


This is a normative statement because it depends on value judgments and cannot be proven true or false by comparison against real world data. This specific statement makes the judgment that farmers need a higher living standard and that family farms need to be saved. Consumers who purchase more expensive milk products might argue otherwise.

See also

  • Positive economics
    Positive economics

    Positive economics is the branch of economics that concerns the description and explanation of economic phenomena . It focuses on facts and cause-and-effect relationships and includes the development and testing of economic theory....
  • Distribution (economics)
    Distribution (economics)

    Distribution in economics refers to the way total Output or income is distributed among individuals or among the factors of production . In general theory and the national income and product accounts, each unit of output corresponds to a unit of income....
  • Justice (economics)
    Justice (economics)

    'Justice' in many usages, including economic ones, may express ethical acceptance of some possible social state against which other possible social states are measured....
  • Welfare economics
    Welfare economics

    Welfare economics is a branch of economics that uses microeconomics techniques to simultaneously determine allocative efficiency within an economy and the income Distribution associated with it....
  • Social welfare function
    Social welfare function

    In economics a social welfare function can be defined as a Function of a real variable that ranks conceivable social states from lowest on up as to welfare of the society....
  • Social choice theory
    Social choice theory

    Social choice theory studies how measures of individual interests, values, or welfares in theory could be aggregated to reach a collective decision....
  • The Is-ought problem
    Is-ought problem

    In meta-ethics, the is-ought problem was raised by David Hume , who noted that many writers make claims about what ought to be, on the basis of statements about what is....