Positive economics

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Positive economics (as opposed to normative economics) is the branch of economics that concerns the description, quantification and explanation of economic phenomena.[1] It focuses on facts and cause-and-effect behavioral relationships and notes that economic theories[2] must be consistent with existing observations. Positive economics as science concerns analysis of economic behavior[3] to determine what is. Positive economics was once known as value-free (German: wertfrei) economics. Examples of positive economic statements are "the unemployment rate in France is higher than that in the United States," or “an increase in government spending would lower the unemployment rate.” Either of these is potentially falsifiable and may be contradicted by evidence. Positive economics as such avoids economic value judgments. For example, a positive economic theory might describe how money supply growth affects inflation, but it does not provide any instruction on what policy ought to be followed. This contrasts with normative economic statements, in which an opinion is given. For example, “Government spending should be increased” is a normative statement.

Paul Samuelson's Foundations of Economic Analysis (1947) lays out the standard of operationally meaningful theorems through positive economics. Positive economics is commonly deemed necessary for the ranking of economic policies or outcomes as to acceptability. John Neville Keynes (1891)[4] and Milton Friedman, in an influential 1953 essay,[5] elaborated on the distinctions between positive and normative economics. Positive economics is sometimes defined as the economics of "what is", whereas normative economics discusses "what ought to be".

The methodological basis for positive/normative distinctions is rooted in the fact-value distinction in philosophy. The principal proponents of such distinctions originate with David Hume and G. E. Moore. The logical basis of such a relation as a dichotomy has been disputed in philosophical literature. Such debates are reflected in discussion of positive science and specifically in economics, where critics such as Gunnar Myrdal (1954) and proponents of Feminist Economics such as Julie A. Nelson,[6] Geoff Schneider and Jean Shackelford,[7] and Diana Strassmann[8] dispute the idea that economics can be completely neutral and agenda-free.

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  1. ^ Stanley Wong (1987). "positive economics," The New Palgrave: A Dictionary of Economics, v. 3, pp. 920-21
  2. ^ Richard G. Lipsey (2008). "positive economics." The New Palgrave Dictionary of Economics. Second Edition. Abstract.
  3. ^ Lionel Robbins (1932). An Essay on the Nature and Significance of Economic Science.
  4. ^ John Neville Keynes (1891). The Scope and Method of Political Economy
  5. ^ Milton Friedman (1953). "The Methodology of Positive Economics," Essays in Positive Economics.
  6. ^ Nelson, Julie A. (Spring 1995). "Feminism and Economics". The Journal of Economic Perspectives. 9 (2): 131–148. doi:10.1257/jep.9.2.131. JSTOR 2138170.
  7. ^ Schneider, Geoff; Shackelford, Jean. "Ten Principles of Feminist Economics: A Modestly Proposed Antidote". Dept. of Economics, Bucknell University. Archived from the original on 2012-06-30. Retrieved 2015-05-09. 2. Values enter into economic analysis at many different levels. When economists study the economy, they make many choices which are influenced to various degrees by their values. The issues that economists choose to study, the kinds of questions they ask, and the type of analysis undertaken all are a product of a belief system which is influenced by numerous factors, some of them ideological in character. ... Understanding the role of values is especially important because the male-dominated field of economics tends to regularly overlook issues of importance to women, children and families—other than as variables in models.
  8. ^ Strassmann, Diana (20 January 1997). "Editorial: Expanding the Methodological Boundaries of Economics". Feminist Economics. 3 (2): vii–ix. doi:10.1080/135457097338771a. All economic statistics are based on an underlying story forming the basis of the definition. In this way, narrative constructions necessarily underlie all definitions of variables and statistics. Therefore, economic research cannot escape being inherently qualitative, regardless of how it is labeled.


A.2: Objection 2: Positive economics is value-free
A.3: How positive economics involves morality

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