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Video transcript

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 positive statement well the fact that someone 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 all right let's look at another one and this says 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 a 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 is something that's testable now the next statement raising taxes on the wealthy slows economic growth is that 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 in countries that didn't do this we could run a computer simulation to try to understand whether the statement is true now 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 unfair this is someone's opinion it's not something that's testable you can't test whether the 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 as a matter of morals or opinion and not 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
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