The role of normative

economics
Unit 1.2
Economists commonly prefer to distinguish normative economics ("what ought to
be" in economic matters) from positive economics ("what is").

Samples of normative economic statements include "Women should be provided

higher school loans than men," "Workers should receive a greater share of capitalist
profits," and "Working citizens should not pay for hospital care."

Normative economic statements typically contain keywords such as "should" and

"ought."

Think of some other normative statements in Economics. What are some opinions
that you hold? Where do your opinions come from?

Many normative (value) judgments, however, are held conditionally, to be given

up if facts or knowledge of facts changes
A consensus of normative views

Society requires a consensus of opinion to function effectively. Commonly

held values that the majority of people believe.

For example a consensus of opinion in Scandavian countries is that a

more progressive tax system is an effective way of managing the
economy to provide more government services for everybody to enjoy.

This is not a consensus of opinion that is held in an economy like the USA

Can you think of other commonly held economic values that are not
shared equally around the world?
Make sure you know
the difference
between these words:

Equity

Equality

Inequality is caused
by the unequal
ownership of factors
of production. As the
market system (most
efficient use of
resources) thrives on
incentives an unequal
ownership of factors
is inevitable. Does
this mean the market
system is inequitable?
Here is a view on inequality. What do you think?
https://www.youtube.com/watch?v=1e35Vf-9n8E
https://www.youtube.com/watch?v=
dttG9aIa9RQ