Difference Between Positive Economics vs. Normative Economics

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Main Difference

Economics is the branch of knowledge that deals with the production, consumption, and transfer of wealth. The other famous definition of the economics tells that it is the relation of the scarcity of the commodities and their demand. Following it we can determine that economics is the broader concept, as it is the knowledge which has both the basic essence of arts and sciences. Even if we are not an accounting or banking students, we came across the concepts of economics in daily lives when we have to make choices in between spending and saving. The economics is mainly divided into two types, here we will be discussing two other distinct types of economics; Positive Economics and Normative Economics. Positive economics is the branch of economics that is based on the facts. Moreover, its validity can be checked using the proper scientific techniques. On the other hand, the normative economics is based on opinion, the point of view or just estimation. Although, the validation of normative economics can’t be checked using scientific or any other technique.

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Comparison Chart

Positive EconomicsNormative Economics
DefinitionThe positive economics is the branch of economics that is based on the facts.The normative economics is the branch of economics that is based on opinion, the point of views or merely estimations.
ValidityThe validity of statements in positive economics can be verified using the scientific technique.Validity can’t be checked in the case of normative economics.
ExplainsThe positive economics explains how the economic world is.The normative economics explains how the economic world should be.
NatureThe positive economics is descriptive in nature.The normative economics is prescriptive in nature.

What is Positive Economics?

The positive economics is the branch of economics that is based on facts. The statements made in this type of economics can either be proved true or false, after checking their validation through the scientific techniques. The descriptive type of economics tells the reality or what is happening around with relation to the economics. The positive economics is based upon reports, news, scientific methods, audio/visual proves and surveys. It has the objective-oriented approach which makes it directly related to the issue or matter being addressed. Different decisions and policies are made in compliance with them as they are fact based, and their validity can also be checked. The economic issues are also addressed in the positive economics as it explains the cause and effect relationship between variables. Using positive economics makes sure that better decisions with respect to economic activities are made.

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What is Normative Economics?

The normative economics is the branch of economics that is based on opinions. The validity of statements can’t be checked using the scientific method or any other technique. It is prescriptive in nature and it just passes the value judgment made by the individual or even by the group. The normative economics mainly deals with the concepts of ideas that how should the economic activities should be to make the economy stable. It tells ‘what it should be’, on the other hand, the positive economics tells what is happening in the economic world. The normative economics statement can either be based on the opinion, the point of views or merely the estimations. In other words, we can say that the normative economics is about the suggestions to make the economy better. In some cases, if the opinion gets the logical prove through approved techniques it can transform as the positive economics.

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Positive Economics vs. Normative Economics

  • The positive economics is the branch of economics that is based on the facts. On the other hand, the normative economics is the branch of economics that is based on opinion, the point of views or merely estimations.
  • The validity of statements in positive economics can be verified using the scientific technique. Although, validity can’t be checked in the case of normative economics.
  • The positive economics explains how the economic world is. Contrary to this, the normative economics explains how the economic world should be.
  • The positive economics is descriptive in nature, whereas the normative economics is prescriptive in nature.

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