Normative and positive statements | Basic economics concepts | AP Macroeconomics | Khan Academy

Summary

This video script delves into the distinction between normative and positive statements, commonly found in economic and philosophical discussions. Normative statements reflect personal opinions or ethical beliefs about how the world should be, while positive statements are testable assertions about how the world is. The script provides examples to illustrate each type, such as the opinion-based nature of welfare fairness and the testable effects of tax policies on economic growth, highlighting the importance of distinguishing between what can be empirically verified and what is subjective judgment.

Takeaways

• 📚 Normative statements are based on opinions, ethics, or morals and reflect how the world should be.
• 🔍 Positive statements are testable and can be verified through empirical evidence or analysis, regardless of personal opinion.
• 🤔 The distinction between normative and positive statements is often made in economic and philosophical contexts.
• 🚫 Normative statements cannot be tested for truth or falsity; they are subjective and based on belief.
• 🔬 Positive statements can be empirically tested, even if the results may be inconclusive or subject to interpretation.
• 👎 The statement 'Paying people who aren't working, even though they could work, is wrong and unfair' is normative due to its judgment of right and wrong.
• 📈 The claim that welfare programs reduce the incentive to work is positive because it can be tested through comparative studies or surveys.
• 💼 The idea that raising taxes on the wealthy to fund government programs can affect economic growth is a positive statement, as it can be examined through simulations or case studies.
• 📉 Similarly, the statement that raising taxes on the wealthy slows economic growth is positive, as it can be empirically tested.
• 📋 The use of words like 'should' in a statement is a strong indicator that it is normative, as it suggests a prescriptive opinion rather than a testable fact.
• 🌐 Understanding the difference between normative and positive statements is crucial for clear communication and analysis in economics and policy-making.

Q & A

What is the main topic of the video?

The main topic of the video is to discuss the difference between normative and positive statements, particularly in the context of economics and philosophy.

What is a normative statement according to the video?

A normative statement is one that reflects a matter of opinion or ethics, indicating how the world should be, and it cannot be tested.

What is a positive statement according to the video?

A positive statement is one that can be tested for its validity, regardless of whether it is true or not, and does not necessarily reflect personal opinion.

How does the video differentiate between a normative and a positive statement?

The video differentiates by stating that normative statements are about opinions or ethics and cannot be tested, while positive statements can be empirically tested.

What is an example of a normative statement given in the video?

An example of a normative statement given in the video is 'Paying people who aren't working, even though they could work, is wrong and unfair.'

Why is the statement about welfare reducing the incentive to work considered a positive statement?

The statement is considered positive because it can be tested by instituting a welfare program on a small scale and comparing it to a similar situation without welfare to see its effect on work incentives.

What does the video suggest about the statement 'Raising taxes on the wealthy to pay for government programs grows the economy'?

The video suggests that this statement is a positive one because it can be tested through simulations or by examining case studies of countries that have implemented such policies.

How does the video handle the statement 'Raising taxes on the wealthy slows economic growth'?

The video classifies this statement as positive because it can be tested by looking at the economic outcomes of countries that have raised taxes on the wealthy versus those that have not.

What is the giveaway word in the statement 'The government should raise taxes on the wealthy to pay for helping the poor' that makes it normative?

The word 'should' is the giveaway that makes this statement normative, as it indicates a prescriptive opinion rather than a testable fact.

What is the key takeaway from the video regarding the distinction between normative and positive statements?

The key takeaway is that normative statements are based on morals or opinions and are not testable, while positive statements, regardless of agreement or disagreement, can theoretically be tested for their validity.

Can you provide a real-world example of how one might test a positive statement from the video?

A real-world example could be conducting an empirical study to compare the employment rates and economic indicators before and after implementing a welfare program to test its impact on work incentives.

Outlines

00:00

📚 Understanding Normative and Positive Statements

This paragraph introduces the distinction between normative and positive statements, often used in economic and philosophical discussions. Normative statements are based on opinions, ethics, or morals, reflecting how the world should be, while positive statements are testable claims that can be verified or falsified. The video aims to classify various economic statements into these two categories.

🤔 Classifying 'Paying People Not Working' as Normative

The first example statement, 'Paying people who aren't working, even though they could work, is wrong and unfair,' is identified as a normative statement. This is because it expresses an opinion on what is right or wrong, which cannot be empirically tested but is a matter of personal belief.

🔍 Testing the Impact of Welfare Programs Positively

The second statement, 'Programs like welfare reduce the incentive for people to work,' is classified as a positive statement. It suggests a hypothesis that can be tested through empirical methods, such as instituting a welfare program on a small scale and comparing it to a similar situation without such a program to observe its effect on work incentives.

📈 Analyzing the Economic Effects of Taxing the Wealthy

The statement 'Raising taxes on the wealthy to pay for government programs grows the economy' is also considered positive. It proposes a testable claim about the economic impact of a specific policy. The video suggests that one could run simulations or examine case studies to determine the validity of this statement.

🛑 The Testable Assertion of Taxing Wealth and Economic Growth

Similarly, the statement 'Raising taxes on the wealthy slows economic growth' is a positive statement. It can be empirically tested by comparing economic growth rates in countries that have implemented such policies with those that have not, using computer simulations or historical data.

🏛️ The Normative Call for Taxing the Wealthy to Help the Poor

The final example, 'The government should raise taxes on the wealthy to pay for helping the poor,' is a normative statement. The use of the word 'should' indicates a prescriptive opinion rather than a testable fact, emphasizing the ethical or moral stance of the speaker.

Keywords

💡Normative statements

Normative statements are expressions of opinion or belief about how things should be, often involving ethical or moral judgments. In the video, the instructor uses the example of paying people who aren't working as a normative statement, indicating it's a matter of opinion on fairness rather than something that can be empirically tested. The term is central to the video's theme of distinguishing between subjective and objective claims in economic and philosophical contexts.

💡Positive statements

Positive statements, in contrast to normative ones, are claims that can be tested or verified through evidence or observation. The video explains that even if a statement like 'Programs like welfare reduce the incentive for people to work' feels subjective, it is actually a positive statement because it can be empirically tested through studies or surveys, making it a key concept in understanding the difference between opinion-based and testable claims.

💡Economic context

The economic context is the backdrop against which the video discusses the concepts of normative and positive statements. The instructor uses economic scenarios and policies, such as welfare programs and taxation, to illustrate the application of these concepts. For example, the statement about welfare programs affecting work incentives is placed within an economic framework to demonstrate how positive statements can be tested in real-world economic conditions.

💡Opinion

Opinion refers to a personal belief or judgment that is not necessarily based on facts or knowledge. In the script, the instructor identifies 'wrong and unfair' as an opinion, which is a normative statement because it cannot be empirically verified but is instead a matter of personal ethics or morals, highlighting the subjective nature of such statements.

💡Ethics

Ethics are moral principles that govern a person's or group's behavior. The video script mentions ethics in relation to normative statements, such as the opinion on paying people who aren't working, which is framed as an ethical judgment rather than a testable fact. This keyword helps viewers understand that normative statements often stem from ethical considerations.

💡Testable

The term 'testable' is used to describe statements that can be empirically verified or falsified through methods such as experimentation, observation, or statistical analysis. The video emphasizes that positive statements, like the impact of welfare on work incentives, are testable, which is crucial for distinguishing them from normative statements that are based on opinion.

💡Welfare program

A welfare program is a government initiative designed to provide financial assistance to individuals in need. In the video, the instructor uses welfare programs as an example of a subject that can be empirically tested to determine its impact on work incentives, thus illustrating the concept of a positive statement in an economic context.

💡Taxation

Taxation is the process by which the government levies a financial charge on individuals or entities to fund public expenditures. The video discusses the effects of taxing the wealthy, both as a normative issue of fairness and as a positive statement that can be tested for its impact on economic growth, showing how taxation can be viewed from both ethical and empirical perspectives.

💡Economic growth

Economic growth refers to the increase in the production of goods and services in an economy over time. The video script uses the concept of economic growth to discuss the potential effects of taxing the wealthy, both positively and negatively, as a way to demonstrate how economic outcomes can be measured and tested, which is central to the theme of positive statements.

💡Simulation

A simulation is a method used to model and analyze complex systems or processes. In the context of the video, the instructor suggests using a simulation to test the impact of certain economic policies, such as raising taxes on the wealthy, on economic growth. This keyword illustrates the scientific approach to testing positive economic statements.

💡Government programs

Government programs are initiatives implemented by the state to address various societal needs or issues. The video script mentions government programs in the context of funding through taxation, highlighting the normative debate over fairness and the positive analysis of their economic impact, thus connecting the concept to both ethical and empirical discussions.

Highlights

The video discusses the distinction between normative and positive statements, often used in economic and philosophical contexts.

A normative statement reflects personal opinion or ethics about how the world should be.

Positive statements are testable and do not necessarily have to be true.

The video will classify economic statements into normative or positive categories.

Statement 'Paying people who aren't working is wrong and unfair' is identified as a normative statement.

Normative statements cannot be tested and are based on belief.

Welfare programs' impact on work incentives is a testable positive statement.

The statement 'Raising taxes on the wealthy to pay for government programs grows the economy' is testable and thus positive.

Testing a statement involves simulations, case studies, or surveys to determine its validity.

The statement 'Raising taxes on the wealthy slows economic growth' is also a positive statement due to its testability.

The use of words like 'should' indicates a normative statement, as in 'The government should raise taxes on the wealthy to help the poor'.

Normative statements are based on ethical or moral beliefs rather than testable facts.

The video emphasizes the importance of distinguishing between testable and non-testable statements in economics.

Understanding the difference helps in evaluating the credibility and applicability of economic theories and policies.

The video concludes by reinforcing the definitions of normative and positive statements and their implications.

Normative statements are subjective and cannot be empirically verified, unlike positive statements.

Transcripts

- [Instructor] What we're going to do in this video

is discuss the difference between normative statements

and positive statements, and you'll see these words used

usually in an economic context,

sometimes a philosophical one.

A normative statement is one that really is a matter

of opinion, maybe a matter of ethics,

something that someone thinks is how the world should be.

While a positive statement is something that,

it doesn't necessarily have to be true

but it's something that can be tested.

So what we're going to do in this video

is look at a bunch of statements around economics

and think about whether they would be classified

as normative statements, things that are opinions,

that are a matter of ethics or morals,

or whether they are positive statements,

things that can be tested.

So let's look at our first statement.

This says, "Paying people who aren't working,

"even though they could work, is wrong and unfair."

So regardless of whether or not you agree

with this statement, is it a normative statement

or a positive statement?

Well the fact that someone's saying it's wrong

and it's unfair, this is pretty clearly a matter of opinion

so this would be a normative statement.

You can't test whether this is wrong or unfair,

you would just have to believe that it is wrong and unfair.

Now let's look at another statement.

Programs like welfare reduce the incentive

for people to work.

Is this a normative statement or a positive statement?

Well it might feel a little normative,

it might feel like this is an opinion,

but it actually can be tested.

You could institute some welfare program on some small scale

and compare it to a comparable place

where there isn't a welfare program and see what it does

for incentives to work, you survey people,

you see how many people work in one situation or another.

It might be a false statement, it might be a true statement,

but either way, it actually can be tested,

so this would be a positive statement

so I'll put it in this category right over here,

this is a positive, positive statement.

Alright, let's look at another one.

This say, "Raising taxes on the wealthy to pay

"for government programs grows the economy."

Is that a normative statement or a positive statement?

Well once again, this can be tested.

It might be true, it might be false, maybe your test

is even inconclusive, but it can be tested,

you could try to run a simulation, you could look

at case studies of countries that did do this

and see what happens to their economy

versus ones that didn't do it.

And so this is, even though it looks like something

that someone who favors raising taxes on the wealthy

maybe out of fairness arguments, something that they would

say, this statement itself is not normative,

the statement can be tested,

so this is a positive statement.

A good giveaway for normative statement,

if it said something like it is fair to raise taxes

on the wealthy to pay for government programs,

that would have been a normative statement

or we should do this, that would have been a normative

statement but here, this is something that's testable.

Now the next statement, "Raising taxes on the wealthy

"slows economic growth."

Is that a normative statement or a positive statement?

Well, once again, this might feel like someone

who is against raising taxes, who think it's unfair

to raise taxes on the wealthy, something that they would say

but the statement itself can actually be tested.

So this is also a positive statement,

even though in some ways it's the opposite statement

as the one that we just did.

Because once again, we could look at countries that did this

and countries that didn't do this,

we could run a computer simulation to try to understand

whether this statement is true.

Let's do one last statement.

This says, "The government should raise taxes

"on the wealthy to pay for helping the poor."

Is this normative or positive?

Well in this situation,

the word should is a pretty big giveaway,

should, or it's fair or unfair, this is someone's opinion,

it's not something that's testable,

you can't test whether this statement is right or wrong,

it's based on, do you believe ethically, morally,

that this is true?

And so this is a normative statement,

so I'll put it in the normative column.

So big picture, these words normative and positive,

these are fancy words but all they mean is normative

is a matter of morals or opinion and can't really be tested

while a positive statement, whether they're right or wrong

or whether you agree or disagree with them,

these are things that in theory could be tested.