Positive economics

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Positive economics

Positive 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 concerns the description and explanation of economic phenomena (Wong, 1987, p. 920). It focuses on facts and cause-and-effect relationships and includes the development and testing of economics theories. Earlier terms were value-free economics and its German

German language

German is a West Germanic languages, thus related to and classified alongside English language and Dutch language. It is one of the world's world language and the most widely spoken mother tongue in the European Union....
counterpart wertfrei economics. These terms were challenged as persuasive

Persuasive definition

A persuasive definition is a form of definition which purports to describe the 'true' or 'commonly accepted' meaning of a term, while in reality stipulating an uncommon or altered use, usually to support an argument for some view, or to create or alter rights, duties or crimes....
rather than descriptive.

Positive economics as science

Science

In its broadest sense, science refers to any systematic knowledge or practice. In its more usual restricted sense, science refers to a system of acquiring knowledge based on scientific method, as well as to the organized body of knowledge gained through such research....
(Robbins, 1932
An Essay on the Nature and Significance of Economic Science

Lionel Robbins' Essay sought to define more precisely economics as a science and to coax substantive implications. Analysis is relative to "accepted solutions of particular problems" based on best modern practice as referenced, especially including the works of Philip Wicksteed, Ludwig von Mises, and other Continental European economists....
) concerns analysis of economic behavior

Behavior

Behavior or behaviour refers to the action s or reactions of an object or organism, usually in Relational theory to the environment. Behavior can be conscious or Unconscious mind, overt or covert, and voluntary or involuntary....
.

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Encyclopedia

Positive economics is the branch of economics

Economics

German language

Persuasive definition

Science

Behavior

Falsifiability

Falsifiability is the logical possibility that an assertion can be shown false by an observation or a physical experiment. That something is "falsifiable" does not mean it is false; rather, that if it is false, then this can be shown by observation or experiment....
theorems is in Paul Samuelson

Paul Samuelson

Paul Anthony Samuelson is an United States neoclassical economist economist known for his contributions to many fields of economics, beginning with his general statement of the comparative statics method in his 1947 book Foundations of Economic Analysis....
(1947

Foundations of Economic Analysis

Foundations of Economic Analysis is a book by Paul A. Samuelson published in 1947 .It sought to demonstrate a common mathematical structure underlying multiple branches of economics from two basic principles: mathematical programming behavior of agent and stability of Economic equilibrium as to economic systems ....
). Positive economics as such avoids economic 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....
judgements. For example, a positive economic theory

Theory

For a more detailed account of theories as expressed in formal language as they are studied in mathematical logic see Theory A theory, in the general sense of the word, is an analytic structure designed to explain a set of observations....
might describe how money supply

Money supply

In economics, money supply, or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
growth affects inflation

Inflation

In economics, inflation is a rise in the general price level of goods and services in an economy over a period of time. The term "inflation" once referred to increases in the money supply ; however, economic debates about the relationship between money supply and price levels have led to its primary use today in describing price inflatio...
, but it does not provide any instruction on what 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....
ought to be followed.

Still, positive economics is commonly deemed necessary for the ranking of economic policies or outcomes as to acceptability (Wong, 1987, p. 921), which is normative economics

Normative economics

Normative economics is the branch of economics that incorporates Value theory judgments about what the economy ought to be like or what particular policy actions ought to be recommended to achieve a desirable goal....
. Positive economics is sometimes defined as the economics of "what is", whereas normative economics discusses "what ought to be". The distinction was exposited by John Neville Keynes

John Neville Keynes

John Neville Keynes was a UK economist and father of John Maynard Keynes....
(1891) and elaborated by Milton Friedman

Milton Friedman

Milton Friedman was an United States economist, statistician and public intellectual, and a recipient of the Nobel Memorial Prize in Economic Sciences....
in an influential 1953 essay

Essays in Positive Economics

Milton Friedman's book Essays in Positive Economics has as its lead an original essay "The Methodology of Positive Economics," on which this article focuses....
.

The methodological basis for a positive/normative distinction has its roots in the fact-value distinction

Fact-value distinction

The fact-value distinction is a concept used to distinguish between arguments which can be claimed through reason alone, and those where rationality is limited to describing a collective opinion....
in philosophy, the principal proponents of such distinctions being David Hume

David Hume

David Hume was a Scotland philosopher, economist, historian and a key figure in the history of Western philosophy and the Scottish Enlightenment....
and G. E. Moore. The logical basis of such a relation as a dichotomy

Dichotomy

A dichotomy is any splitting of a whole into exactly two non-overlapping parts.In other words, it is a partition of a set of a whole into two parts that are:...
has been disputed in the philosophical literature. Such debates are reflected in discussion of positive science

Positive science

In the humanities and social sciences, the term positive is used in a number of ways.One usage refers to analysis or theories which only attempt to describe how things are, as opposed to how they should be....
and specifically in economics, where critics, such as Gunnar Myrdal

Gunnar Myrdal

Karl Gunnar Myrdal was a Sweden economist, politician, and Nobel laureate. In 1974, with Friedrich Hayek, he received the Nobel Memorial Prize in Economic Sciences for "pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena."...
(1954) dispute the idea that economics can be completely neutral and agenda-free.

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

The price of milk has risen from $3 a gallon to $5 a gallon in the past five years.

This is a positive statement because it can be proven true or false by comparison against real world data. In this case, the statement focuses on facts.

External links

Milton Friedman ([1953] 1966). excerpts from Friedman's essay

Positive economics

See also

External links