- The distinction between positive and normative economics.
- Positive economics.
- Normative economics.
- The value-free.
- Economic examples.
The methodology in economics is important because it gives us a better understanding of the economic analysis. The purpose of economic theory is to provide a comprehensive framework for the study of human behaviour declares Gary Becker (1976). As the aim of the economy for governments is to improve the social welfare, there are different means to reach this issue . The goal of welfare economics is to maximize “the sum of utilities of individuals whose preferences are normally represented as greedy and selfish”. The distinction between positive and normative economics is not a recent question. Positive economic relates rather about sciences. It explains the economic view from the facts, thus it wants to be objective with “declarative statements about the world”.
[...] appraisal. Normative economics The normative economic connects with the ought-statement and the value. It shows an evaluation of the state of the world. A statement can be though as wrong by the majority, it does not mean that it IS wrong. In the normative point of view, the economist gives a value not a fact that can be true or false. The value judgment by Nagel, which links to the normative economic is called appraising value judgment. It introduces evaluative assertions about state. [...]
[...] The theorem of the invisible hand stresses that the market mechanism permits that individuals are the best judges of their own interests. As this theorem is not falsifiable, it is a part of normative economics. In economics, the normative notion tries to have an impact in the society by making “policy recommendations” while the positive economics points out the explanations of economic behaviour. Ricketts and Shoesmith (1992) conclude “both normative and positive differences explained different views, but there was more different divergence on normative questions than on positive questions”. [...]