Concept of Positive and Normative Economics:

Positive Economics:

The concept of positive economics was followed by Modern economists Prof. Lionel Robbins and Classical economists Adam smith, J.B. Say, J.S. Mill, David Ricardo etc. The positive economics studies the things as they happen in reality. It explains what is, what was and what will be. It means positive economics only describes the things as they are. It aims to explain cause and effect relationship among economic variables relating to the economic problems. It is not related to rightness and wrongness of things. It does not deal about mortality but explains the reality. For example, A rise in consumer’s income will lead to a rise in the demand for new cars.

According to J.M. Keynes, “A positive science may be defined as a body of systematized knowledge concerning what is” 

Normative Economics:

The concept of normative economics was highlighted by Neo-classical economists Alfred Marshall, A.C. Pigou etc. The normative economics studies the things as they should be. It explains the situation of ‘what ought to be’. So, Normative science studies the things not as they are but as they ought to be. The result obtained from normative study may not applicable in all situations. It gives judgement about rightness or wrongness. Normative analysis may be influenced by personal bias in some cases. For example, the government should increase the minimum wage to Rs. 60/- per hour in order to reduce relative poverty.

According to J.M. Keynes, “A normative science is a body of systematized knowledge relating to criteria of what ought to be”

Difference between Positive and Normative Economics:

Economics is a science and there are the two different aspects of economics. Positive economics studies the real picture of the subject whereas, Normative economics studies the facts not as they are but as they ought to be. So, there are several differences between positive and normative economics which are listed below:

Chapter 1 Part 6