Positive and Normative Economics


The study of economics involves both positive and normative aspects in terms of understanding the events taking place around us, taking decisions, prescribing rules and regulations and implementing policies to solve economic problems.

Positive economics talks about “What is” where as normative economics talks about “What ought to be” or “what should be”.

Positive economics talks about the things happening or might happen in the economic world.

Normative economics gives value judgments about things and tells us to “What should have happened”.

Consider the following statements.

[1] India’s population have crossed 100 crore mark. India is the second largest populated country in the world.

[2] India should not allow its population to grow so fast. It must control its population.

Statement [1] describes a phenomenon which is happening. This is a positive statement.

Statement [2] gives a value judgment on India’s population. This is a normative statement.