Disagreements Over Positive Statements
3) Which of the following statements is a positive statement? A) Substitutes for fossil fuels should be developed. B) Canada should reduce its imports of consumer goods. C) The higher the price of gasoline, the less it is consumed. D) There should be a price for gasoline across Canada. E) Canadian businesses should pay more taxes. 2) A positive statement is a statement that A) says what is and what should be. B) what is desirable. C) what is, was or will be. (D) non-negative figures. E) what should be, but is not. Positive and normative economic statements are needed to shape the policy of a country, region, industrial sector, institution or company. 4) Of the following statements, which belongs better in the field of normative economics than positive economics? A) Canadian governments should support the automotive industry. B) An increase in the minimum wage leads to an increase in unemployment.
C) Technological changes have reduced the cost of mobile phone service. D) The price of a Canadian dollar is $0.85 E) When a drought occurs, the price of vegetables tends to increase. These statements are based on the values of the person making them and cannot be proven false. Normative economics focuses on ideological, opinion, pre-prescription, values, and “what should be” judgments that aim at economic development, investment projects, and scenarios. Its purpose is to summarize people`s lust (or absence) for different economic developments, situations, and programs, asking or quoting what should happen or what should be. Positive statements (and positive arguments in general) are objective. As such, they can be tested. These can be divided into two categories. One of them is an assumption such that “unemployment is caused by a decline in GDP”.
This claim can be empirically tested by analyzing unemployment and GDP data. The other category is a factual statement, like “It`s raining” or “Microsoft is the world`s largest computer operating system manufacturer.” Like assumptions, such claims can be shown to be correct or false. A factual allegation or hypothesis is a positive statement. Also note that positive statements can be false, but as long as they are verifiable, they are positive. Two types of statements in economics can be tested. One of them is the hypothesis. Another verifiable claim is a factual statement such as “It`s raining” or “Microsoft is the world`s largest computer operating system manufacturer.” Like assumptions, such claims can be shown to be correct or false. A factual allegation or hypothesis is a positive statement.
Although normative statements are generalized and subjective, they act as necessary channels for out-of-the-box thinking. Such opinions can form the basis of the necessary changes that have the potential to completely alter a particular project. But normative economics cannot be the only basis for decision-making on important economic fronts. Positive economics fulfills the objective point of view that focuses on facts, cause and impact. Combined with a positive economy, normative economics can be useful for establishing, generating, and satisfying new ideas and theories for different economic goals and perspectives. Because people have different values, normative statements often cause disagreement. An economist whose values lead him to the conclusion that we should help the poor more will disagree with someone whose values lead to the conclusion that we should not. Since there is no test for these values, these two economists will remain at odds, unless one convinces the other to adopt another set of values.
Many of the differences of opinion among economists are based on such differences in values and therefore are unlikely to be resolved. . . .