Question

Determine whether each of the following statements is positive or normative. (Remember that a positive statement isn't necessarily cornect; it just makes a factual claim rather than a moral judgment.) [LO 1.7] a. People who pay their bills on time are less likely than others to get into debt. b. Hard work is a virtue. c. Everyone should pay his or her bills on time. d. China has a bigger population than any other country in the world. e. China's One-Child Policy (which limits families to one child each) helped to spur the country's rapid economic growth. f. Lower taxes are good for the country.

Short answer

Statements a, d, and e are positive; statements b, c, and f are normative.

Step-by-step solution

Identifying Positive Statements

A positive statement is one that is factual and can be tested or validated. It's objective in nature. Let’s analyze each statement: 1. **Statement a**: "People who pay their bills on time are less likely than others to get into debt." This is a factual claim about financial behavior and can be validated with data, thus making it a positive statement. 2. **Statement d**: "China has a bigger population than any other country in the world." This statement is factual and can be verified by census data, so it is also a positive statement. 3. **Statement e**: "China's One-Child Policy (which limits families to one child each) helped to spur the country's rapid economic growth." While it involves the evaluation of an economic policy, it can be examined by looking at economic data and trends. Thus, it's a positive statement.

Identifying Normative Statements

A normative statement includes opinions or judgments about what ought to be. These statements are subjective and are not purely based on facts. Let's identify them: 1. **Statement b**: "Hard work is a virtue." This is a value judgment about hard work, and it cannot be tested or validated as true or false. It's a normative statement. 2. **Statement c**: "Everyone should pay his or her bills on time." This statement suggests a moral obligation, which is subjective. It is a normative statement. 3. **Statement f**: "Lower taxes are good for the country." This statement reflects an opinion on tax policies and their effects on the country, categorizing it as a normative statement.

Key concepts

Factual Claims

Factual claims are statements that describe the world as it is, rather than how it should be. They are objective and can be tested for accuracy. These statements often rely on data, research, and observable outcomes to verify their truthfulness.
A prime example comes from everyday life, such as when news reports state weather predictions or when scientists discuss the climate based on gathered evidence.

• Factual claims make assertions about an objective reality.
• Their accuracy can be confirmed or refuted through evidence or data.
• They do not convey opinions or what one believes ought to be.

For instance, the statement "China has a bigger population than any other country in the world" is a factual claim. We can check population data from various research sources to confirm this fact. Similarly, stating that the One-Child Policy spurred economic growth in China can be inspected through historical economic data.
Factual statements serve as the backbone for positive analysis in economics, focusing on how things are without including any judgment or recommendation.

Moral Judgment

Moral judgments refer to statements or beliefs that make assertions about what is right or wrong, good or bad. They are inherently subjective and reflect personal or societal values and beliefs. These statements cannot be objectively tested or proven true or false since they rely heavily on opinion and ethical viewpoints.
Moral judgments influence how policies or actions are assessed based on values or ethics, rather than on factual evidence alone. For example, when someone states, "Everyone should pay his or her bills on time," they're expressing their beliefs about financial responsibility.

• They express opinions on how things should be.
• They often involve value-laden language and imply ethical considerations.
• Unlike factual claims, they cannot be supported or invalidated by data alone.

These judgments play a significant role in shaping normative statements in economics, which include value-based assertions about the goodness or badness of certain economic outcomes.

Economic Policy Analysis

Economic policy analysis often involves a blend of positive and normative statements. Positive statements form the basis of evaluating current economic situations or the consequences of certain policies. For example, by making factual claims, we can assess what the potential impact of a certain economic policy might be.
However, recommendations or decisions about these policies often incorporate normative statements, which reflect ethical, cultural, or moral judgments.

• Positive analysis describes and predicts outcomes based on data and models.
• Normative analysis reflects opinions on the desirability of various policy outcomes.
• Policymakers often have to balance factual evidence with societal values to make decisions.

For instance, the argument "lower taxes are good for the country" is largely normative, as it expresses a judgment about what tax policy should achieve based on someone's values. Nevertheless, analyzing such a statement would begin with factual economic data that highlights how tax changes affect the economy.
This combination of analysis allows for a robust understanding of policies and their broader implications.