usmbguest5318
Gold Member
Without resorting to complex philosophical explanations:
- Economic normativism is a way of approaching/concluding on a matter based predominantly on what one thinks "should be" or "should happen." What need one know about the details of a matter to form normative conclusions about it? Nothing really. Economic normativists think of themselves as wanting to/aiming to "do right" by some group/individual that are their "chosen ones," thereby "cherry-picking" economic "winners and losers."
- Economic positivism/empiricism is a way of approaching/concluding on a matter based predominantly on what is shown regarding the totality of economic cost-benefit analysis. Economic positivists are largely unconcerned about who be the "winners and losers." Instead, they say "here are the rules of the games to which we've all long agreed. Use the resources available to you to maximize your satisfaction/utility given those rules." Pure positivists do not make judgement about whether a given action is good or bad.
Can one be an economic positivist and still favor normative stances that don't align what positive economics show? Insofar as one can allow one's emotions to prevail over what is shown "by the math," yes, one can because economic normativism is about the moral/ethical value judgements one makes about how resources should be used and/or not used. Can everything be evaluated, wholly or preponderantly, using empirical methods? No, but whole lot can.
Consider the example of the "college degree premium":
In contemporary societies, there is a strong college wage premium. That is to say, people who go to college make more money, on average, than people who don't.
Normativists ask should this premium should exist, and they find that it should or should not, depending on what they see as more and less valuable to one's life. Furthermore, normatists observe the positive economics pertaining to the incomes of people having and lacking college degrees and determine that people (or more people) should go to college, and that public policy should promote, perhaps even subsidize, people's college attendance. Implicit in any normative conclusion such as the preceding is the assumption that "everyone" agrees that the course that most likely will produce the most labor-related earnings is the best course for each of us to follow. [1]
Positivists, on the other hand, refrain from asserting that one should (good) or should not (bad) go to college. Instead they say that if one wants to maximize the earnings of one's labor (maximize the financial satisfaction obtained from working), graduating well from from college bodes quite well for one doing just that. They'd say too that in comparison to certain other ways of doing so, it's among the more efficacious means to the noted end. Other positivists would analyze the cost of going to college in general (or going to a specific college) to determine whether, given what type labor one wants to sell, going to college will produce enough of a wage premium, in the long run, to offset the economic cost of obtaining a/a specific college('s) degree.
As for structuring public policy to subsidize people's college attendance, some positivists condone using public resources that way provided doing so returns more value than is spent/consumed to subsidize them; however, pure economic positivists would say no, period, because subsidies distort the interplay of the "dispassionate hands" of supply and demand, thereby deciding "arbitrarily" who "wins" and who "loses" (or "wins" less).
Note:
Normativists ask should this premium should exist, and they find that it should or should not, depending on what they see as more and less valuable to one's life. Furthermore, normatists observe the positive economics pertaining to the incomes of people having and lacking college degrees and determine that people (or more people) should go to college, and that public policy should promote, perhaps even subsidize, people's college attendance. Implicit in any normative conclusion such as the preceding is the assumption that "everyone" agrees that the course that most likely will produce the most labor-related earnings is the best course for each of us to follow. [1]
Positivists, on the other hand, refrain from asserting that one should (good) or should not (bad) go to college. Instead they say that if one wants to maximize the earnings of one's labor (maximize the financial satisfaction obtained from working), graduating well from from college bodes quite well for one doing just that. They'd say too that in comparison to certain other ways of doing so, it's among the more efficacious means to the noted end. Other positivists would analyze the cost of going to college in general (or going to a specific college) to determine whether, given what type labor one wants to sell, going to college will produce enough of a wage premium, in the long run, to offset the economic cost of obtaining a/a specific college('s) degree.
As for structuring public policy to subsidize people's college attendance, some positivists condone using public resources that way provided doing so returns more value than is spent/consumed to subsidize them; however, pure economic positivists would say no, period, because subsidies distort the interplay of the "dispassionate hands" of supply and demand, thereby deciding "arbitrarily" who "wins" and who "loses" (or "wins" less).
Note:
- That assumption is, of course, not universally true. I and several of my fellow general partners have repeatedly turned down invitations to be considered for appointment to our firm's "C-level." For varying reasons, while each of us thought the increase in income was a good thing, none of us wanted the added responsibility that also comes with those roles. I'm sure we are not the only people running around who've had opportunities we fully understood and chose willfully to let them pass and are quite content with having done so.
One thing that should be clear to most readers is that not many people are pure or near-pure positivists. Indeed, even most economists, despite their research being largely positive, are personally normative when they make certain choices, both personal ones and public policy ones. Obviously, from an argumentation standpoint, the most powerful arguments are those for which the totality of a cost-benefit analysis provides results that align with one's preconceived normative notions. Unfortunately, for many normativists, few and far between are such things, and unfortunately for many positivists, there are lot of normativists, which is to say, there are many stances that normativists hold and for which "the numbers" don't support their ostensibly "kinder and gentler" position, or for which there is as yet no comprehensive and sound analysis that has produced numbers supporting their case.
NOTE:
Whether one is positivist or normativist has nothing to do with whether one is Liberal or Conservative.
Thread Question:
- Are you preponderantly (or more) an economic positivist or normativist?
