- [Instructor] What we're
going to do in this video is discuss the difference
between normative statements and positive statements, and
you'll see these words used usually in an economic context, sometimes a philosophical one. A normative statement is
one that really is a matter of opinion, maybe a matter of ethics, something that someone thinks
is how the world should be. While a positive statement
is something that, it doesn't necessarily have to be true but it's something that can be tested. So what we're going to do in this video is look at a bunch of
statements around economics and think about whether
they would be classified as normative statements,
things that are opinions, that are a matter of ethics or morals, or whether they are positive statements, things that can be tested. So let's look at our first statement. This says, "Paying people
who aren't working, "even though they could
work, is wrong and unfair." So regardless of whether or not you agree with this statement, is
it a normative statement or a positive statement? Well the fact that
someone's saying it's wrong and it's unfair, this is pretty
clearly a matter of opinion so this would be a normative statement. You can't test whether
this is wrong or unfair, you would just have to believe
that it is wrong and unfair. Now let's look at another statement. Programs like welfare reduce the incentive for people to work. Is this a normative statement
or a positive statement? Well it might feel a little normative, it might feel like this is an opinion, but it actually can be tested. You could institute some welfare
program on some small scale and compare it to a comparable place where there isn't a welfare
program and see what it does for incentives to work, you survey people, you see how many people work
in one situation or another. It might be a false statement,
it might be a true statement, but either way, it actually can be tested, so this would be a positive statement so I'll put it in this
category right over here, this is a positive, positive statement. Alright, let's look at another one. This say, "Raising taxes
on the wealthy to pay "for government programs
grows the economy." Is that a normative statement
or a positive statement? Well once again, this can be tested. It might be true, it might
be false, maybe your test is even inconclusive,
but it can be tested, you could try to run a
simulation, you could look at case studies of
countries that did do this and see what happens to their economy versus ones that didn't do it. And so this is, even though
it looks like something that someone who favors
raising taxes on the wealthy maybe out of fairness arguments,
something that they would say, this statement
itself is not normative, the statement can be tested, so this is a positive statement. A good giveaway for normative statement, if it said something like
it is fair to raise taxes on the wealthy to pay
for government programs, that would have been a normative statement or we should do this, that
would have been a normative statement but here, this is
something that's testable. Now the next statement,
"Raising taxes on the wealthy "slows economic growth." Is that a normative statement
or a positive statement? Well, once again, this
might feel like someone who is against raising
taxes, who think it's unfair to raise taxes on the wealthy,
something that they would say but the statement itself
can actually be tested. So this is also a positive statement, even though in some ways
it's the opposite statement as the one that we just did. Because once again, we could
look at countries that did this and countries that didn't do this, we could run a computer
simulation to try to understand whether this statement is true. Let's do one last statement. This says, "The government
should raise taxes "on the wealthy to pay
for helping the poor." Is this normative or positive? Well in this situation, the word should is a pretty big giveaway, should, or it's fair or unfair,
this is someone's opinion, it's not something that's testable, you can't test whether this
statement is right or wrong, it's based on, do you
believe ethically, morally, that this is true? And so this is a normative statement, so I'll put it in the normative column. So big picture, these words
normative and positive, these are fancy words but
all they mean is normative is a matter of morals or opinion
and can't really be tested while a positive statement,
whether they're right or wrong or whether you agree
or disagree with them, these are things that in
theory could be tested.