Positive and Normative Economic Analysis - Essay Example

Statements made under positive economic analysis are factual and logical. Data collection and analysis are used to assert the validity of the statement by backing up the claim made using facts. For example, the inflation rate in the economy can be said to be 6%. This statement presents a fact that can actually be proven by evaluating price changes in the economy over a given period of time.

Normative Economic Analysis

In this analysis, claims made by normative statements and/or theories can be neither be tested nor empirically proven. Normative statements in most cases employ factual information to make economic claims, but the statements by themselves are not factual. They are therefore logical claims but lack evidence. The normative analysis encompasses high-value judgment and personal beliefs. In this regard, they are hard to falsify or verify. People who make normative statements basically present their own opinions, based on their morals and standards of life (Mukherjee 19). Unemployment is better compared to inflation is an example of a normative statement. This statement has no basis for being tested. Therefore, it cannot be empirically proven.