Normative economics is the branch of economics that incorporates value judgments (normative judgements) about what the economy ought to be like or what particular policy actions ought to be recommended to achieve a desirable goal. Normative economics looks at the:

• desirability of certain sectors of the economy over others
• desirability of certain actors in the economy over others
• desirability of certain distributions of resources in the economy over others,
• constraints on choices or policy paths which might otherwise be made

In doing so, it underlies expressions of support for particular economic policies.

Examples

The desirability of certain aspects of the economy

Imagine a scenario in which manufacturing jobs are being lost while jobs in the fields of nursing and computer programming are being gained. An economist or politician may claim that the loss of the particular class of jobs in manufacturing erodes the "foundation" of a country.

The desirability of certain actors in the economy

The desirability of certain distributions of resources in the economy

Constraints on choices or paths which might otherwise be made

Criticism

Interpersonal Comparisons of Utility

Neutrality of Science and Academia

Politicization of economics

Conditionality

It is common to distinguish normative economics ("what ought to be" in economic matters) from positive economics ("what is"). But many normative (value) judgments are held conditionally, to be given up if facts or knowledge of facts changes, so that a change of values may be purely scientific (Sen, 1970, p, 61). This undermines the common distinction (Wong, 1987, p. 923). But Sen distinguishes basic (normative) judgments, which do not depend on such knowledge, from nonbasic judgments, which do. He finds it interesting to note that "no judgments are demonstrably basic" while some value judgments may be shown to be nonbasic. This leaves open the possibility of fruitful scientific discussion of value judgments (Sen, 1970, pp. 63-64).

See also

• Normative science
• Positive economics
• Distribution (economics)
• Justice (economics)
• Welfare economics
• Social welfare function
• Social choice theory
• The Is-ought problem

References

• Marc Fleurbaey (2008). "ethics and economics," The New Palgrave Dictionary of Economics. Abstract.
• Milton Friedman (1953). "The Methodology of Positive Economics," Essays in Positive Economics
• John C. Harsanyi (1987), “value judgemts," The New Palgrave: A Dictionary of Economics, v. 4, pp. 792-93
• Daniel M. Hausman and Michael S. McPherson (1996). Economic Analysis and Moral Philosophy, Cambridge: Cambridge University Press.
• Phillipe Mongin (2002). "Is There Progress in Normative Economics?", same title in Stephan Boehm, et al., eds., Is There Progress in Economics?
• Amartya K. Sen (1970), Collective Choice and Social Welfare. "5.3 Basic and Nonbasic Judgments" & "5.4 Facts and Values," pp. 59-64.
• Stanley Wong (1987). “positive economics," The New Palgrave: A Dictionary of Economics, v. 3, pp. 920-21.

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