Value judgments and the principles of economics textbook.

• Author: Heath, Will Carrington
• Position: Communications

1. Introduction

   Economics principles texts almost never confuse basic theoretical issues, and yet some of the leading texts do confuse a rather fundamental point of methodology. They mistakenly identify the distinction between positive and normative with the distinction between facts and values--a misidentification that is so widespread as to be axiomatic for many economists.

   The following brief essay will attempt to clear up the methodological confusion surrounding the positive/normative distinction, then offer some suggestions as to what should, and should not, constitute the textbook discussion of this important topic.

2. The Positive/Normative Distinction

   Most textbook discussions of economic methodology emphasize the positive/normative distinction. Samuelson and Nordhaus |12, 9~ give the subject a fairly standard treatment:

   Positive economics describes the facts and behavior in the economy. What are the causes of poverty in the United States? What will be the effect of higher cigarette taxes on smokers? How has the economic performance of socialist countries compared with that of capitalist countries? These questions can be resolved only by reference to facts . . . they are all in the realm of positive economics.

   Normative economics involves ethical precepts and value judgments. Should the government give money to poor people? Should the budget deficit be reduced by higher taxes or lower spending? Should the socialist countries introduce private property and stock markets? These issues can be debated, but they can never be settled by science or by appeal to facts. There are no right or wrong answers to these questions because they involve ethics and value judgments rather than facts.

   This passage confuses two very different distinctions. First is the distinction between statements of "what is" and statements of "what ought to be." This, the positive/normative distinction, correctly recognizes that "ought" statements embody one or more value judgments in addition to the positive principles of economics. The other distinction is between facts and values. We refer to this as the "fact/value distinction," but it actually denotes an epistemological perspective on value judgments; specifically, that they lie beyond the realm of objective scientific knowledge. According to this perspective the "validity" of value judgments is ultimately a matter of subjective opinion (or even faith) and as such cannot be tested in any objective sense.

   Samuelson and Nordhaus are not the only authors who import the fact/value distinction into their discussion of the positive/normative distinction. McConnell and Brue |8, 6~ write that "Positive economics concerns what is, while normative economics embodies subjective feelings about what ought to be"; similarly, Gwartney and Stroup |5, 13~ tell their readers that positive economics "attempts to determine 'what is'," while normative economic statements "concern 'what ought to be,' given the philosophical views of the advocate." They add that "In contrast with positive statements, normative economic statements cannot be tested and proved false (or confirmed to be correct) . . . since their validity rests on value judgments." Parkin |9, 17-18~ states that a "difference of opinion on a positive matter can ultimately be settled by careful observation and measurement. A difference of opinion on a normative matter cannot be settled in that way." Baumol and Blinder |2, 16~ hope to give their readers "a...