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Normative Economics

The branch of economics which incorporates the method of value judgments and most importantly normative judgments is known as normative economics. Normative economics deals with such value judgment which would be able to find out about what the economy should to be like. Or normative economics also tries to find out about what specific policies should be adopted to attain a sought-after objective. The appropriateness of definite characteristics of economy is what normative economics looks forward to. Definite policies of economy are given appropriate support by normative economics.

The distinction between normative economics, which is economics that deals with policies that should have been and positive economics, which is economics that deals with policies about what it is, is quite a widespread phenomenon. But at the same time there are many value judgments that are being done in normative economics which are being held temporarily. So in such cases these value judgments are required to be presented if there is any kind of change in information or an appropriate understanding of the essentials. Therefore this whole concept reveals that such a change in values could simply be scientific in nature. But such a type of distinction between the normative economics with that of positive economics challenges the general distinction that is much more prevalent.

A noted economist Amartya K. Sen has been able to differentiate between judgments of basic or normative nature, which does not depend upon such an understanding from that of non-basic judgment, which on the other hand does depend upon such an understanding. An interesting fact that has been noted by Amartya K. Sen is that there are no judgments prevalent in the present day world which can be regarded to be basic in nature. But on the other hand there are some value judgments that can be made known to be non basic in character. As a result of this, there remains a wide scope for the possibility of a productive scientific debate about the whole concept of value judgment.

The entire concept of normative economics can be explicitly illustrated with the help of an example in the form of a statement. It has been argued that the exact cost of per gallon of milk should be $6 so that it would be able to offer the dairy farmers a soaring standard of living along with adequately saving his family farm. Such a statement that has been cited above can be said to be a clear example of normative statement since it totally depends upon the judgment of values. And this cannot be demonstrated to be true or false by comparing it with the data provided by the present world situation. The statement which states that farmers require a standard of living that is high in nature so that they would be able to save their family farms in a proper manner may be a correct statement. But there are some consumers who might not agree with the statement since they are used to buying much more costly milk from departmental stores. In such a case they may not give sufficient heed to this matter and continue buying costly milk from the stores.

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