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#REDIRECT [[Positive and normative economics]]
'''Normative economics''' (as opposed to [[positive economics]]) is that part of [[economics]] that expresses [[Value theory|value]] judgments ([[Norm (philosophy)|normative]] judgments) about economic [[Equity (economics)|fairness]] or what the economy ''ought to be'' like or what goals of [[public policy]] ought to be.<ref name = "Samuelson">[[Paul A. Samuelson]] and [[William Nordhaus|William D. Nordhaus]] (2004). ''[[Economics (textbook)|Economics]]'', 18th ed., pp. 5-6 & [end] Glossary of Terms, "Normative vs. positive economics."</ref>


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It is common to distinguish normative economics ("what ought to be" in economic matters) from [[positive economics]] ("what is"). But many normative (value) judgments are held conditionally, to be given up if facts or knowledge of facts changes, so that a change of values may be purely scientific.<ref>Stanley Wong (1987). “Positive economics," The ''New Palgrave: A Dictionary of Economics'', v. 3, p. 21.</ref> But welfare economist [[Amartya Sen]] distinguishes ''basic (normative) judgments'', which do not depend on such knowledge, from ''nonbasic'' judgments, which do. He finds it interesting to note that "no judgments are demonstrably basic" while some value judgments may be shown to be nonbasic. This leaves open the possibility of fruitful scientific discussion of value judgments.<ref>[[Amartya Sen|Amartya K. Sen]] (1970), ''Collective Choice and Social Welfare'', pp. 61, 63-64).</ref>


Positive and normative economics are often synthesized in the style of [[practical idealism]]. In this discipline, sometimes called the "art of economics," positive economics is utilized as a practical tool for achieving normative objectives.

An example of a normative economic statement is as follows:

<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The price of milk should be $6 a gallon to give dairy farmers a higher living standard and to save the family farm.<br>This is a normative statement, because it reflects value judgments. This specific statement makes the judgment that farmers need a higher living standard and that family farms need to be saved.<ref name = "Samuelson"/>

Subfields of normative economics include social choice theory, cooperative game theory, and mechanism design.

Some earlier technical problems posed in [[welfare economics]] and the [[theory of justice]] have been sufficiently addressed as to leave room for consideration of proposals in applied fields such as [[resource allocation]], [[public policy]], social indicators, and [[Income inequality metrics|inequality and poverty measurement]].<ref>Marc Fleurbaey (2008). "Ethics and economics," ''[[The New Palgrave Dictionary of Economics]]''. [http://www.dictionaryofeconomics.com/article?id=pde2008_E000272&q=normative%20economics&topicid=&result_number=1 Abstract.]</ref>

== See also ==
* [[Distribution (economics)]]
* [[Is-ought problem]]
* [[Justice (economics)]]
* [[Normative science]]
* [[Positive economics]]
* [[Social welfare function]]
* [[Social choice theory]]
* [[Welfare economics]]

==Notes==
{{Reflist|2}}

==References==
* [[Andrew Caplin]] and Andrew Schotte, ed. (2008). ''The Foundations of Positive and Normative Economics: A Handbook'', Oxford. [http://www.oup.com/us/catalog/general/subject/Economics/Theory/?view=usa&ci=9780195328318 Description] and [http://books.google.com/books?id=GoAoZelUInsC&printsec=find&pg=PR9=gbs_atb#v=onepage&q&f=false preview.]
* Marc Fleurbaey (2004). "Normative Economics and Theories of Distributive Justice," ''The Elgar Companion to Economics and Philosophy'', J.B. Davis and J. Runde, ed., pp. [http://books.google.com/books?hl=en&lr=&id=_ZujWW52n9cC&oi=fnd&pg=PA132&dq=false 132-58.]
* _____ (2008). "Ethics and economics," ''[[The New Palgrave Dictionary of Economics]]''. [http://www.dictionaryofeconomics.com/article?id=pde2008_E000272&q=normative%20economics&topicid=&result_number=1 Abstract.]
* Milton Friedman (1953). "[[Essays in Positive Economics#The Methodology of Positive Economics|The Methodology of Positive Economics]]," ''Essays in Positive Economics''
* [[John C. Harsanyi]] (1987), “Value judgments," ''The [[New Palgrave: A Dictionary of Economics]]'', v. 4, pp.&nbsp;792–93
* [[Daniel M. Hausman]] and Michael S. McPherson (1996). ''Economic Analysis and Moral Philosophy'', Cambridge: Cambridge University Press.
* Phillipe Mongin (2002). "Is There Progress in Normative Economics?" in Stephan Boehm ''et al.'', eds., ''Is There Progress in Economics?'', pp. [http://books.google.com/books?id=KbQc92sYwIMC&pg=PA145&=false#v=onepage&q&f=false 145-170.]
*[[Amartya Sen|Amartya K. Sen]] (1970), ''Collective Choice and Social Welfare''. "5.3 Basic and Nonbasic Judgments" & "5.4 Facts and Values," pp.&nbsp;59–64.
* Stanley Wong (1987). “Positive economics," The ''New Palgrave: A Dictionary of Economics'', v. 3, pp.&nbsp;920–21.

{{DEFAULTSORT:Normative Economics}}
[[Category:Welfare economics]]
[[Category:Welfare economics]]
[[Category:History of economic thought, methodology, and heterodox approaches]]
[[Category:Economic methodology]]

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