Difference Between Positive and Normative Analysis
What is positive analysis?
Factual statements of descriptive nature about the world are identified as positive statements by the economists. However, the word ‘positive’ does not imply that they only mean good facts or good news but it may in that sense, include bad news as well. Positive analysis, like wise, utilizes scientific principles in order to reach objective and testable conclusions.
What is normative analysis?
Value-based statements, on the other hand, that are prescriptive in nature are referred to as normative statements. Normative statement as a support use factual evidences, however they are not factual on their own. Rather, they include the underlying morals, standards and opinions of the people making such statements. The process, through which people make recommendations for taking a specific standpoint or acting in a specific way, is known as normative analysis.
Difference between positive and normative analysis:
In order to understand the meaning of positive and normative analysis in a better way, examples of each can be considered. For example, a statement like ‘the rate of unemployment is presently at 10 percent’, is positive. On the other hand, a statement like ‘The rate of unemployment is quite high’ is normative statement. Now the first statement is said to be a positive statement because it shows a factual data about the world i.e. 10 percent rate of unemployment. The specific data 10 percent rate is testable in the real world. Therefore, it is more factual and testable in nature than compared to normative statements. Now in the example for normative statement, the data is a general data showing no specific value. The term quite high does not exactly mention how much high, which is answered in the positive statement 10%.
Application of the two types of analysis:
Positive economics relates to fact and object based analysis, whereas normative economics relates to value based and subjective analysis. Positive economic statements
Factual statements of descriptive nature about the world are identified as positive statements by the economists. However, the word ‘positive’ does not imply that they only mean good facts or good news but it may in that sense, include bad news as well. Positive analysis, like wise, utilizes scientific principles in order to reach objective and testable conclusions.
What is normative analysis?
Value-based statements, on the other hand, that are prescriptive in nature are referred to as normative statements. Normative statement as a support use factual evidences, however they are not factual on their own. Rather, they include the underlying morals, standards and opinions of the people making such statements. The process, through which people make recommendations for taking a specific standpoint or acting in a specific way, is known as normative analysis.
Difference between positive and normative analysis:
In order to understand the meaning of positive and normative analysis in a better way, examples of each can be considered. For example, a statement like ‘the rate of unemployment is presently at 10 percent’, is positive. On the other hand, a statement like ‘The rate of unemployment is quite high’ is normative statement. Now the first statement is said to be a positive statement because it shows a factual data about the world i.e. 10 percent rate of unemployment. The specific data 10 percent rate is testable in the real world. Therefore, it is more factual and testable in nature than compared to normative statements. Now in the example for normative statement, the data is a general data showing no specific value. The term quite high does not exactly mention how much high, which is answered in the positive statement 10%.
Application of the two types of analysis:
Positive economics relates to fact and object based analysis, whereas normative economics relates to value based and subjective analysis. Positive economic statements