What's the distinction between positive and normative economic statements?

Positive economic statements are objective and fact-based, while normative economic statements are subjective and value-based.

Positive economics is concerned with the description and explanation of economic phenomena. It focuses on facts and cause-and-effect relationships. For example, a positive economic statement might be, "If the price of iPhones falls, demand for iPhones will increase." This statement is based on the law of demand, a fundamental principle in economics that states that, all else being equal, as the price of a product decreases, the quantity demanded increases. Positive economics aims to explain what happens in the economy and how different elements are related. It is verifiable and can be tested using factual data.

On the other hand, normative economics is based on value judgments. It expresses an opinion about what ought to be, rather than what is. It involves subjective statements about economic fairness or what the economy should be like. For example, a normative statement might be, "The government should reduce taxes on the poor to promote income equality." This statement is based on a value judgment about income distribution and the role of government in society. Normative economics is not fact-based and cannot be tested or proven right or wrong.

In summary, the key difference between positive and normative economic statements lies in their basis and verifiability. Positive economics is based on facts and can be tested, while normative economics is based on values and cannot be empirically tested. Understanding the difference between these two types of economic statements is crucial for economic analysis and policy-making.