Normative statements in economics are subjective statements that express value judgments, opinions, or prescriptions about how things ought to be. They involve subjective beliefs about what is desirable or undesirable, right or wrong, but they cannot be empirically proven or disproven. Normative statements often reflect personal or societal values and beliefs. Examples of normative statements in economics include:
- "The government should increase taxes on the wealthy to reduce income inequality"
- "Women should earn the same salary as men"
- "The government should provide basic healthcare to all citizens"
In contrast, positive statements in economics deal with assumptions about the state of the world and some conclusions. They are based on factual observations or evidence and can be tested and verified through empirical analysis. Positive statements are objective and do not involve value judgments or personal opinions. Examples of positive statements in economics include:
- "The average temperature in New York City in July is 77 degrees Fahrenheit"
- "Based on past data, big tax cuts would help many people, but government budget constraints make that option unfeasible"
It is important to distinguish between normative and positive statements in economics because normative statements cannot be tested or verified through empirical analysis, while positive statements can be.