Normative Statements or Normative Economics

Normative statements, or normative economics, are the part of economics that seeks to prescribe how economic reality should be. This involves making value judgments about whether the economic reality is good or bad and how it ought to be.

Value Judgments

Normative analysis frequently includes value judgments. When value judgments are involved, it is difficult for economics alone to determine what is best, as ethics, religion, or political philosophy also come into play. However, economics can help clarify trade-offs, illuminate problems, and sharpen the debate.

Since a value judgment cannot be refuted with evidence, normative statements are not testable. However, political discussions are typically more informed when they are based on positive statements.