Updated January 13, 2015
Most economics textbooks put some effort into distinguishing between normative economics and positive economics. Normative is defined as having to do with ethical judgments about what is good or bad or better or worse. Positive is defined as being pure description without any ethical judgement. Economists like to say that pure science is positive whereas religion and much of philosophy is normative and they try to make a distinction between economic science (positive description) and economic policy (normative prescription).
But this is wrong. Humans never say or do anything that is purely positive. The very concept of positivism is a fallacy. Even God cannot do or say anything to humans that is purely positive if humans have moral weight.
One of the most fundamental concepts of economics is the opportunity cost. That is defined as the next BEST thing that you lose when you make any choice. Notice that “best” is part of the definition. Best is a normative judgement. Economics teaches that every choice we make has an opportunity cost and that makes every choice we make a normative judgement. Every minute, I make the unconscious choice to keep breathing. That is a normative choice and now that you are thinking about it, you are consciously deciding to continue breathing. You could stop at any time and that would also be a normative decision. I hope you do the right thing.
I also chose to become an economist and that decision, like all decisions, was normative. I decided that economics was a BETTER path for me than trying to help the homeless like Mother Theresa or becoming homeless myself. I decided that it is at least as good if not better than all the other career paths I could take. I might have been wrong, but that really is the choice that I made and continue to make. Every economist and scientist who tries to do purely positive science, is choosing that path that as a normative decision. One of the ironies of positivism is that it is a normative philosophy of science that thinks that normative philosophy is not as good as positive science. Thus positivism denegrates itself.
Positivists might counter that they may have made a normative decision to become a positivist, but that an equation like E=mc2 is a purely positive description of the world. This is false. No description is purely positive because all description requires normative choices. I decided that E=mc2 is a BETTER example of what positivists would think is purely positive than all the infinite other possible examples. I could have made a ‘positive’ description of the atoms of iodine on my little toe, but I decided that E=mc2 would be BETTER. A physicist could devote her energies to infinite different pursuits and by choosing to examine E=mc2 rather than the iodine atoms on my little toe, she is making a normative decision, not a positive one.
The scientific method itself (in all its many variations) is a normative value judgement. Scientists think that it is a BETTER guide towards truth than astrology or pure intuition. The scientists who think science should be value-free are making a value judgement about science. First of all, the idea that values are bad is a normative judgement and secondly, the discernment of what science is value-free is a subjective judgement imbued with normative meaning. One of the main processes of modern science is the selection of journal articles for publication is a normative judgement which is biased towards the tastes of the current paradigm and which is extremely biased towards selecting papers that meet that 95% cutoff. The 95% statistical significance cutoff is a normative judgement that was originally chosen for convenience of calculation and convenience is a normative criteria.
The High Opportunity Cost of Positivism
When scholars choose to think that positive science exists and is BETTER than normative judgement, they are not only engaging in a logical fallacy, but they are failing to think about the crucial importance of making the BEST possible normative judgments. That is why positivism isn’t just irrational and illogical, it is also harmful. People who believe that they are somehow separate from or ABOVE ethical reasoning are more likely to have BAD ethical reasoning because they don’t realize that they are making important normative judgments with every breath they take and every sound they make. Positivists are more prone to making ethical mistakes like Thomas Midgley, Jr. who won numerous scientific awards from the scientific community for inventing the lead compounds in gasoline that poisoned people around the world until it was banned and the CFCs that were well on their way to destroying the planet if they had not also been banned.
The whole point of any description of anything is to accomplish some sort of end goal. That is normative. Therefore all description is motivated by normative causes and nothing is purely positive. People who pretend to avoid normative, ethical reasoning are deceiving themselves and prone to making bad ethical judgements, like Mr. Midgley, because of having accidental normative motivations rather than deliberately facing up to their ethical choices and challenges.
What most positivists really mean when they talk about positive analysis is empirical analysis. “Positive” is a misleading term for this because empirical analysis always has some measure of uncertainty, so empirical analysis is never completely positive by the ordinary dictionary definition of the word. And it is good to keep sight of the fact that all empirical analysis is always just a means to an end. Some researchers (positivists in particular) may not be fully conscious of their ends, but everyone always has normative goals that motivate all empirical choices and all communication about them.
That is a very good thing. People shouldn’t waste their time randomly trying to observe iodine molecules and blathering about them without any purpose. The positivists are wrong to elevate positive analysis over normative analysis. It is only through normative analysis that positive (or, we should say, empirical) analysis gets any worth whatsoever. Without normative motivation, empirical facts are as useless as the knowledge of the precise location of that atom of iodine on my little toe. It is the normative makes life worth living. Trying to eliminate the normative is nihilism.
An example of how positivism has been nihilistic is the rise of mmutilitarianism. Positivists caused economics to reject its moral foundations in the 1930s and 40s and abandon utilitarianism. Then this marriage of positivism and economics created a mutated accidental lovechild, mmutilitarianism, which would cause less harm if economists embraced the normative so that they could recognize mmutilitarianism as being the moral philosophy that it is and not a positivist way of empirically comparing different states of the world. When you accept that mmutilitarianism is a moral philosophy, it is easier to avoid its weaknesses and capitalize on its strengths as a simple heuristic that guides most of the “positive” empirical analysis in economics.
Part of positivism is useful and that is the analysis of ends and means, but positivists have confused these concepts partly because they chose to adopt new terminology that makes the concepts more confused. Going back to more commonly-understood English terms might help clarify the important issues. We should replace the word “positive” with the word “empirical” which is closer to what positivists really mean anyhow. Then we should recognize that normative and positive are inseparable because all empirical analysis is useless without normative goals. Most people don’t understand “normative” and a better word would be “useful.” That makes it obvious that people can do never do anything with empirical (or “positive” ) information without making normative choices and it would be useless to try. The positivists believed in the fallacy that there is a division between the normative and the positive in science, and the change in terminology makes this fallacy clearer. Some empirical information and theories are more useful than others, but there is no point working on empirical analysis that is not useful.
The logical positivist influence upon economics also created other problems such as the over reliance upon axiomatic deductive mathematical models that are almost completely divorced from empirical evidence and led to the real business cycle macro fiasco. Logical positivism was popular among philosophers in the early 20th century, but was mostly abandoned by philosophers a half century ago. Economics is still under its grip and it is time for economics to start catching up with the developments in the philosophy of science over the past 50 years since economics rejected philosophy for not being positive enough, which, ironically, was a normative, philosophical judgement.
Be suspicious of anyone who claims that they have “better” judgement because they are more objective. Objectivity itself is subjective!