Difference Between Positive Economics vs Normative Economics
Thus Positive Economics about the facts and the practical situations in the Economy whereas Normative Economic deals with the judgmental part or what should have to do? Positive Economy mainly deals with the practical Causes and Relationships in the economy. So the argument related to the positive economy generally varies from person to person. The truthfulness of the statement can be known as the facts and data are available. The thesis under this part of economic is objective in nature. The Normative Economy deals with statements related to fictional opinions. There are no facts present behind each statement and it deals with the thought process of what should be the situation. This part of Economics deals with values, judgments, and opinions. Thus all the statements related to this are priorities on what is to be done according to as per morality rather than the situational requirements. This is under this part of economic is subjective in nature.
In a Normative Economy, we all know that – All the citizens of India should get Free Education and Medical Services from the Government. Thus this is the general theory of the country. Thus the Government should act on this line of work and thighs should happen as per this theory only. But the Positive theory would argue if all the citizens are covered under medical services or not? The real data would be contradictory if it is compared with the normative belief. Thus the normative part itself is fictional in nature and does not back up by real data. Again if we go by the real data analysis we would find that the major population is not getting a free education. Whereas most of the educated population has not taken the Government’s free education. The cost of education for an educated person was very high. Thus it falls under the category of a Positive economy and based upon these facts there might be various opinions from a different group of people.
Positive Economics vs Normative Economics (Infographics)
Below is the top 7 difference between Positive Economics vs Normative Economics:
Key Differences between Positive Economics vs Normative Economics
Both Positive Economics vs Normative Economics are popular choices in the market. The primary difference between Positive Economics and Normative Economics are discussed below:
- One of the primary differences between positive economics and normative economics is a matter of truth. Positive economics deals with the relevant data, facts, and figures required to analyze and the respective arguments. Whereas on the other hand, Normative Economics deals with the fictions and what was required to do and does not include any data interpretations or checking of data.
- The current demand-supply situation, the preferences of the masses, the change in the real course of action by the government and the actual results of the actions which were taken were captured under positive economics. On the other hand, the moral values of a particular scenario, the fictional thought process what as actually projected to carry on include the Normative Economy.
- Positive Economics is always backed up by data, information and the facts whereas normative economics does not require these as it only captures the values.
Positive Economics vs Normative Economics – Comparison Table
Let’s have a look at the Comparison between Positive Economics vs Normative Economics:
The basis of Comparison Between Positive Economics vs Normative Economics
|Related to||Positive economy relates to the causes and effects of an economy. It captures the consumer or the mass sentiment and the consequences.||Normative economics generally believes in the theory which prevails as per the morality or as per the things which need to do.|
|Meaning||It strongly deals with facts and data. Thus the facts lead to various opinions and different judgments.||The Normative Economy deals with the fictional part of the thought process. It deals with what is essential rather than what can be done from the current scenario.|
|Nature||The nature of the positive economy is based on data and facts. It is highly narrative regarding the demand and supply situation and the present trends across the masses.||The Normative economy deals with perceptions and the morally relevant things which need to happen in a certain situation.|
|Argument||The argument which could be arising is objective as it is well backed up by data and relevant information.||The argument would base on subjective because there is no question of real data. All the facts are morally fitted as per the situations.|
|Testing||The statements/ argument under positive economy can be tested with the estimated figures and from there the right or wrong or the difference can be found.||The statement is not possible to test as the data are not available because those are based on a different philosophy, moral values, etc. There is no one who could compare morality along with the actual facts and figures.|
|Caused by Need||The facts are required for a reality check within the economy. Sometimes the desired results may move in a different direction and to control this we need to take the help of a Positive economy.||The opinions are required so as to provide a moral value to the system and the steps which need to be done for better economic results.|
|Based on||Real data, Facts, drivers of demand and supply, the difference in expectations as well as practical implementations, etc.||It is based on moral values, theories of what needs to be done and fictional concepts.|
Conclusion – Positive Economics vs Normative Economics
Both Positive Economics vs Normative Economics concepts are necessary and have its importance based on the situations. The policymakers give emphasize on both Positive Economics vs Normative Economics concepts and their principles are used on a situational basis. The overall framework is required which can be called as the value or the moral of the particular segment. Then the results are required to be extracted and tallied with the budgeted figures. Thus the difference can be obtained and it can be worked upon accordingly so as to get the desired results which were morally supported by the Normative Economics.
4.8 (934 ratings)
This has been a guide to the top difference between Positive Economics vs Normative Economics. Here we also discuss the Positive Economics vs Normative Economics key differences with infographics and comparison table. You may also have a look at the following articles to learn more –
All in One Financial Analyst Bundle (250+ Courses, 40+ Projects)
250+ Online Courses
Investment Banking Course (with 25+ Projects)
Financial Modeling Course (with 15+ Projects)
Equity Research Training Course (with 6+ Projects)
Project Finance Course
Business Valuation Course (with 10+ Projects)