Positive and normative economics

In the <a href="/facts/Philosophy_of_economics/DlculP3u">philosophy of economics</a>, economics is often divided into positive (or descriptive) and normative (or prescriptive) economics. Positive economics focuses on the description, quantification and explanation of economic phenomena, while normative economics discusses prescriptions for what actions individuals or societies should or should not take.
The positive-normative distinction is related to the <a href="/facts/Subjectivity_and_objectivity_(philosophy)/YhXxVe8g">subjective-objective</a> and <a href="/facts/Fact-value_distinction/RRKgnqzH">fact-value distinctions</a> in <a href="/facts/Philosophy/zAH5PVD6">philosophy</a>. However, the two are not the same. Branches of normative economics such as <a href="/facts/Social_choice_theory/ztMqy1bM">social choice</a>, <a href="/facts/Game_theory/zkEIj1ya">game theory</a>, and <a href="/facts/Decision_theory/TbXcQX0v">decision theory</a> typically emphasize the study of prescriptive facts, such as <a href="/facts/Mathematics/pxTouaz4">mathematical</a> prescriptions for what constitutes <a href="/facts/Rational_agent/x5dJh18Q">rational</a> or irrational behavior (with irrationality identified by testing beliefs for <a href="/facts/Self-refuting_idea/FRd20Ytb">self-contradiction</a>). Economics also often involves the use of objective normative analyses (such as <a href="/facts/Cost%25E2%2580%2593benefit_analysis/xjHXgIAF">cost–benefit analyses</a>) that try to identify the best decision to take, given a set of assumptions about value (which may be taken from policymakers or the public).

Positive and normative economics open-in-new

Positive and normative economics