Positive Economics

June 5, 2010

Positive economics is that branch of economics which is mostly concerned with the explanation as well as an elucidation of the various phenomena of economics. The main focus of positive economics is on relationships that are based on facts as well cause-and-effects. The main concern of positive economics is the examination and improvement of theories based on the subject matter of economics. Earlier positive economics were known by different other terms and this includes value-free economics and in German it was known as wertfrei economics. But these terms have been defined by terming it as credible rather than expressive.


Positive economics as a form of science is related to the study of behavior associated with economics. The American economist Paul Samuelson said that a typical type of theoretical statement which is concerned with the subject matter of positive economics is regarded to be a theorem which has its significance operationally. Economic value judgments are being avoided by positive economics. This could be clearly explained by citing an example. A theory of positive economics may be able to illustrate the way in which the increase of money supply influences inflation. But on the other hand it fails to offer any kind of directive regarding the type of policy that should be followed for this.

Positive economics though having some shortcomings are still considered to be a necessary tool for offering credentials to the policies of economics or the outcomes of its acceptability, which is better known to be normative economics. Positive economics is that branch of economics which tries to describe the subject matter as what it is. And normative economics helps in describing the subject matter of economics as what it should have been. This distinction between positive economics and normative economics was thoroughly described by John Neville Keynes in the year 1891 as well as by Milton Friedman in the year 1953 in a popular essay.


The distinction of fact-value that is being used in the subject matter of philosophy can be used for explaining out the methodological foundation of the difference between normative and positive economics. The chief advocates of such a distinction between positive and normative economics are G.E. Moore and David Hume. The basis of logic of such a contrast between these two branches of economics and the relationship between them is also not clear in the philosophical literature. In the arena of positive science and more significantly in the field of economics such kind of debates about the distinction between positive and normative economics is being found. Critics like Gunnar Myrdal have revealed their doubts about such a notion. These critics have put forward their doubts about economics being entirely unbiased and free of any kind of agenda.


The positive economic statement can be demonstrated in a much more clear way by the use of an example. When the amount of milk rises up from $3 to $5 for each gallon of milk in the last five years, then it is considered to be a positive statement. This is because of the reason that the statement could be established as being true or false by comparing the data of the statement with that data of the present day world. So in case of this statement the main concentration is on facts rather than on any other things.

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Written by Uncle Sam · Filed Under Economics 

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