While positive economics is objective and based on facts, normative economics is subjective and value-based. One example of normative economics is stating that the government has a duty to pay for healthcare, whereas a positive approach states that the government funding citizens' healthcare incurs costs.Continue Reading
Stating that the government should pay for healthcare is normative economics, as there is no evidence that the government should do this. Instead, it is based on a value system, which is the idea that everyone should have access to healthcare. In contrast, it is a fact that the government paying for healthcare incurs state costs, which is why such a statement reflects positive economics. Another example of normative economics is stating that bread should cost a certain amount so that people can afford it. Such a statement is based on the value judgement that people should have access to fairly priced food.
As normative economics is sometimes difficult to prove, it stirs debates among politicians and between parties. The majority of economics experts believe that economics should be based on facts, and, therefore, should be positive. However, it is normative economics that drives the value-based policies that exist in government. Normative economics is usually based on what the majority of people hold to be rational, although this still leads to division on issues.Learn more about Economics