Normative Economics and Value Judgements
Economic Methodology and the Evolution of Economic Thought
Syllabus requirement
Explores how equity, equality and other ethical criteria shape policy debates and distinguish normative statements from positive analysis.
Summary
This extract explains how economists use hypotheses, models, and theories, and contrasts positive economics based on empirical evidence with normative economics shaped by value judgements. It outlines how hypotheses are tested, how models and theories develop, and why ceteris paribus is used to simplify complex realities. It also shows the role and limits of empirical evidence and refutation, and illustrates how value judgements influence policymaking despite not being testable. Understanding these distinctions helps students analyse statements, predictions, and policy debates in economics.