Is Economics Positive Science or Normative Science?

(i) Economics is a Positive Science: As stated above, Economics is a science. But the question arises whether it is a positive science or a normative science. A positive or pure science analyses cause and effect relationship between variables but it does not pass value judgment. In other words, it states what is and not what ought to be. Professor Robbins emphasized the positive aspects of science but Marshall and Pigou have considered the ethical aspects of science which obviously are normative.

According to Robbins, Economics is concerned only with the study of the economic decisions of individuals and the society as positive facts but not with the ethics of these decisions. Economics should be neutral between ends. It is not for economists to pass value judgments and make pronouncements on the goodness or otherwise of human decisions. An individual with a limited amount of money may use it for buying liquor and not milk, but that is entirely his business. A community may use its limited resources for making guns rather than butter, but it is no concern of the economists to condemn or appreciate this policy. Economics only studies facts and makes generalizations from them. It is a pure and positive science, which excludes from its scope the normative aspect of human behavior.

Complete neutrality between ends is, however, neither feasible nor desirable. It is because in many matters the economist has to suggest measures for achieving certain socially desirable ends. For example, when he suggests the adoption of certain policies for increasing employment and raising the rates of wages, he is making value judgments; or that the exploitation of labour and the state of unemployment are bad and steps should be taken to remove them. Similarly, when he states that the limited resources of the economy should not be used in the way they are being used and should be used in a different way; that the choice between ends is wrong and should be altered, etc. he is making value judgments.

(ii) Economics is a Normative Science: As normative science, Economics involves value judgments. It is prescriptive in nature and described 'what should be the things'. For example, the questions like what should be the level of national income, what should be the wage rate, how the fruits of national product be distributed among people - all fall within the scope of normative science. Thus, normative economics is concerned with welfare propositions.

Some economists are of the view that value judgments by different individuals will be different and thus for deriving laws or theories, it should not be used.