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And finance Allah shmoop What is positive versus normative analysis

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All right people when you're talking positive economics you're talking

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objective data and facts You're quantifying things with numbers analyzing

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potential causal relationships with rigorous statistical analysis and pointing out

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the way things are in everyone's shared reality When you're

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talking normative economics you're talking opinions and ideology Maybe you

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think it's unfair Some people are working two jobs on

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minimum wage barely getting by while a handful of people

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are rolling in dough Or maybe you think it's unjust

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to redistribute money that people earned no matter what their

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income is Well maybe you think Mohr government regulation and

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social programs will make things better Or maybe you think

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small government or no government is the key to making

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things better depending on the well whatever better looks like

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for you assuming we're all in the same universe and

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talking about reality while positive economic statements are things everyone

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should be willing to agree upon for instance inflation in

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the United States in nineteen forty six was eighteen point

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one percent That's a positive economic statement derived from positive

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analysis You can think positively correct to help you remember

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right If you also thought an inflation rate of eighteen

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point one percent Wow that blows That's a normative economic

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analysis You just did there because well you're thinking well

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it's normal toe have opinions because it is with are

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you know monkey brains So why is knowing the difference

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between positive in normative economic statements so important you can

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think of positive economic analysis as the tool that people

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use you know the fax To try to implement what

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they want to see based on their normative economic opinion

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liberal congressman will seek out liberal positive economics that support

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their normative ideology Just as conservative congressman seek out positive

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economics that support their conservative ideology to make sure you

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know the facts that are positively true it's good to

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know where they're coming from right For instance would you

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trust a study that was funded by the Coca Cola

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Company that says excess sugar is actually good for your

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health Well we wouldn't blame you for wanting to believe

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all of this is true whoever you're rooting for But

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hopefully all the other positive analysis that's been done out

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there on the health problems caused by having a you

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know Coca Cola Sugar Party all day every day That

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would raise your skepticism even if you didn't know who

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funded the study So don't worry You can totally have

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a Norman of economic ideology Just make sure your economic

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evidence is in the positive economic realm And just know

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that when you're talking to someone on the other side

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unquote someone from a different political economic tribe positive analysis

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might get you somewhere while Norman of statements probably won't

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And again this is just how our monkey brains role 00:02:52.6 --> [endTime] keeping it real Who

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