LO:
a) Distinction between positive and normative economic statements
b) The role of value judgments in influencing economic decision making and policy
a) Positive vs. Normative Statements
Positive statement: a statement about what is (i.e. this is factual and is guaranteed to happen e.g. the government is increasing the tax on cigarettes)
Normative statement: a statement that is about what ought to be. It involves a value judgement (i.e. what normally happens e.g. the government is investigating whether it should raise the tax on cigarettes)
b) Influences of economic decision making and policy
Governments make value judgements on economic issues and how much they get involved in the economy will depend on these normative issues. Economic analysis tends to be more concerned with positive issues, i.e. statements of fact that can be tested against real world evidence. Some countries, such as the US, have a predominantly private healthcare system, where people have to pay directly for their treatment. The UK has a predominantly publicly provided healthcare system (the NHS) – to say that the UK’s approach is ‘fairer’ is essentially a value judgement, i.e. a normative issue. To say that the amount spent per head on healthcare in the UK is less than that in the US is a positive statement. Students should understand that the economic decisions made by individuals and the policy decisions made by governments will be based on their value judgements and, as such, are normative.
a) Distinction between positive and normative economic statements
b) The role of value judgments in influencing economic decision making and policy
a) Positive vs. Normative Statements
Positive statement: a statement about what is (i.e. this is factual and is guaranteed to happen e.g. the government is increasing the tax on cigarettes)
Normative statement: a statement that is about what ought to be. It involves a value judgement (i.e. what normally happens e.g. the government is investigating whether it should raise the tax on cigarettes)
b) Influences of economic decision making and policy
Governments make value judgements on economic issues and how much they get involved in the economy will depend on these normative issues. Economic analysis tends to be more concerned with positive issues, i.e. statements of fact that can be tested against real world evidence. Some countries, such as the US, have a predominantly private healthcare system, where people have to pay directly for their treatment. The UK has a predominantly publicly provided healthcare system (the NHS) – to say that the UK’s approach is ‘fairer’ is essentially a value judgement, i.e. a normative issue. To say that the amount spent per head on healthcare in the UK is less than that in the US is a positive statement. Students should understand that the economic decisions made by individuals and the policy decisions made by governments will be based on their value judgements and, as such, are normative.
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