Positive economic analysis
Also called: Positive economics · Topic: Scarcity, Choice and Economic Systems · NCERT: Class 12, Ch 1 "Introduction (Microeconomics)"
Meaning
Positive economic analysis studies how economic mechanisms work and what outcomes they are likely to produce. It deals with "what is" and makes no value judgement about whether an outcome is good or bad. Its statements can be tested and checked against data. J.N. Keynes, in 1891, set positive science apart from normative science and from the art of policy.
Example
Each of these statements is positive:
- "MSP raises farm incomes."
- "Free power leads to over-use of groundwater."
Both can be checked with evidence. The Economic Survey's review of how each sector performed is positive analysis.
Don't confuse with
- Normative economic analysis: Normative analysis judges whether outcomes are desirable, for example "farm power subsidies should be scrapped". It deals with "what ought to be".