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Positive Economic Definitions and Normative Economics

Positive Economic Definitions

Positive economics is a branch of economics that has an objective approach based on facts. It analyzes and explains the usual relationships between variables. This explains to people how the country's economy operates. The positive economy is alternatively known as a pure economy or a descriptive economy.
Positive Normative Economics

When scientific methods are applied to economic phenomena and the problem of scarcity is related, it is a positive economy. Statements based on the positive economy consider what is actually happening in the economy. This helps policymakers to decide whether a proposed action, will be able to fulfill our goals or not. In this way, they accept or reject the statement.

Normative Economic Sense

An economy that uses value assessment, opinion, trust is called the normative economy. This economic branch considers the value and outcome in the statement stating, ' What should be the thing '. It combines subjective analysis and focuses on theoretical situations.

The normative economy demonstrates how the economy should operate. This is also known as economic policy because it takes into account individual opinions and preferences. Therefore, the statement cannot be substantiated right or wrong.

The Difference Between Positive and Normative Economics

The important difference between the positive and normative economics is explained in the following points:

  • Positive economics refers to the science that is based on data and facts. The normative economy is described as a science-based on opinion, value, and judgment.
  • The positive economy is descriptive, but the normative economy is prescriptive.
  • The positive economy explains the cause and effect relationship between variables. On the other hand, the normative economy provides value assessment.
  • A positive economic perspective is an objective, whereas the normative economy has a subjective perspective.
  • The positive economy explains ' what it is ' whereas the normative economy explains ' what it should be '.
  • Positive economic statements can be tested, substantiated, or scientifically proven, which cannot be done with normative economic statements.
  • Economic positives clearly define economic problems. Unlike the normative economy, where solutions are provided for economic problems, based on value assessment.


After looking at both branches of the economy, we can say that these two branches are not contradictory but complementary, and both should go hand in time. While laying the law and theory, the economy should be treated as a positive science, but at the time of practical application, the economy should be treated as normative science.
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