Positive vs Normative Statements
ECON 102 · Section I, Introduction · slides 5–6 · study questions Q1–Q4
The two definitions [5]
Positive
“What are the effects of a policy?”
- A claim about what is, was, or will be
- Settled by evidence
- Can be true or false, still positive either way
- This course is built on these tools
Normative
“Should a policy be implemented?”
- A claim about what ought to be
- Rests on a value judgment
- No amount of data settles it
- Requires a standard of “good”
The test: use this, not the vocabulary
Could evidence, in principle, settle whether this is true?
Yes
POSITIVE
Data could confirm or refute it
→
No, needs a value standard
NORMATIVE
Depends on what you think is good
The trap: “should,” “too,” and “needs to” are not reliable markers.
Q1 is built specifically to punish keyword-spotting, three of its seven statements contain a
trigger word and are still positive. Ask the evidence question every single time.
Q1 worked: sorted by the test, not the words
| Statement | Verdict | Why | |
|---|---|---|---|
| a | Government expenditure on road construction should decrease unemployment rates. | POSITIVE | “Should” = “is predicted to.” A forecast, measurable. |
| b | Government expenditure on road construction is predicted to increase unemployment rates. | POSITIVE | Explicit prediction. Same type as (a), opposite direction. |
| c | The government of Vulcan spends too much on road construction. | NORMATIVE | “Too much” relative to what should be spent. Needs a value standard. |
| d | The temperature today is too warm for it to snow. | POSITIVE | “Too warm for X to occur” is a physical threshold. Check the thermometer. |
| e | There is too little snowfall (0.2 cm) to justify salting the roads. | NORMATIVE | “Justify” imports a cost-benefit value judgment. Contrast directly with (d). |
| f | Canadian GDP is currently growing at 8% per year. | POSITIVE | False, but positive. Truth value ≠ statement type. |
| g | Monetary policy needs to focus on inflation to be effective. | NORMATIVE | Prescribes what policy ought to target, and smuggles in a definition of “effective.” |
Converting between the two [Q2 · Q3]
Normative → Positive
Strip the value word. Replace it with a measurable consequence,
so the claim becomes something data could check.
(c) “Vulcan spends too much on roads”
→ “Vulcan’s road spending exceeds the level that minimises congestion cost per dollar.”
→ “Vulcan’s road spending exceeds the level that minimises congestion cost per dollar.”
Positive → Normative
Add an explicit value standard, say what outcome is desirable
and therefore what ought to be done.
(b) “predicted to increase unemployment”
→ “Because it raises unemployment, this spending should be cut.”
→ “Because it raises unemployment, this spending should be cut.”
Many transformations are acceptable, she says so in the question. Marks are for the mechanism of the switch, not a specific sentence.
Why she bothers [6]
- Normative statements are about value judgments.
- This course focuses on positive economics, tools to analyse the economy and make predictions.
- With the analysis you build using those tools, you and others will make normative judgments.
- So it is important to think about the normative implications of your analysis.
Q4 is the payoff. A report written purely positively (“more generous EI reduces
the incentive to find work, raising unemployment”) still carries normative weight.
Q4(b) answer: yes, there is reason to state your normative position, because
readers will infer your values whether or not you state them. Making the value
standard explicit is more honest than leaving it implicit.