1.1.2

a) Positive and normative statements

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Positive statements are founded on empirical evidence, can be accurately tested for authentication and are regarded as fact. Their objective nature means that they cannot be disregarded by economists. An example would be: "if I buy a house for £100,000, I will have less money to spend on groceries". There is no denying that this sentence is truthful, as if I spend a lot of money on one thing, I will have less to spend on others.

 

Normative statements contrastingly are based on personal judgements, are highly subjective and are regarded as opinion. Because economics is a social science and can't be scientifically tested, the majority of research in the field includes some normative statements. An example would be: "consumers should always save most of their income regardless of the current economic conditions". This is clearly a normative statement, as there is no fact to prove it and it is purely an opinion.

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b) Value judgements

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Value judgements are when positive statements are used to reinforce normative ones. This provides some factual grounding to the reasoning, although there is still some subjectivity surrounding the overall idea. For example, Rishi Sunak may say "the Bank of England should raise the interest rate", followed by "because inflation is at 10%". Here, the prime minister has give his opinion based on a statistical fact (or, a value judgement).

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These weighted assessments are used all the time to influence decision making and policy. Varying interpretations of the same data can be made depending on the economist who analyses it, meaning that there can be a plethora of policy outcomes from identical statistics. This again links back to the fact that economics is not an exact science, but a social science. 

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