Positive, Normative statements and Economic Methodology

Question 1

Is economics a natural or social science?

Answer 1

Economics is a social science because it studies human behavior and decision-making.

Question 2

What is the difference between natural and social sciences?

Answer 2

Natural sciences study the physical world; social sciences study human behavior and society.

Question 3

What is the economic method?

Answer 3

Observation of real-world behavior

Hypothesis formation

Prediction based on the hypothesis

Testing using real data

Revision if evidence doesn’t support the hypothesis

Becomes theory if supported repeatedly

Question 4

What is a positive statement?

Answer 4

A factual statement that can be tested and supported or refuted with evidence (e.g. “An increase in tax reduces consumption”).

Question 5

What is a normative statement?

Answer 5

A value-based opinion that cannot be tested or proven true/false (e.g. “The government should increase benefits”).

Question 6

How can you recognize a normative statement?

Answer 6

It often contains words like “should”, “ought to”, “fair”, “better”, or “too much”.

Question 7

Why is the difference between positive and normative statements important?

Answer 7

It helps distinguish objective analysis from subjective opinion in policy debates.