Positive vs Normative in Economics

Рет қаралды 5,950

Ashley Hodgson

Жыл бұрын

This video explains the difference between positive and normative statements in economics.

Пікірлер: 9

@railzip Жыл бұрын

Keep these videos coming! Thank you

@waterbloom1213 Жыл бұрын

Hi, I stumbled across this channel today and have been enjoying quite a few videos because I wanted to learn some game theory (currently reading Dixit and Nalebluff's Art of Strategy). I have to say, while I do appreciate your enthusiasm put into your videos, on this particular one I highly question the use of predictive models in economics when it comes to making accurate assessments and both the idea that economists stray away from making normative statements or that relying on models is in itself a purely positive position. I don't think there is any other "science" that has the divide of academic economics. Economics as a whole has proven to be and ideologically-driven subject considering all the schools of thought that it has bred throughout several of its subdisciplines. Of the top of my head I am thinking about Classicals, Marxians, Austrians (praxeologists who reject math and those that do not), Marshallian Neoclassicists, Keynesians, New Keynesians, Neokeynesians, Post Keynesians, Chicago monetarists, Saltwater and Freshwater macroeconomists, MMTers, Ostroms, Institutionalists...) How is it then that you can claim that economics attempts to not employ normative statements and advocate for models which purportedly force economists into checking for assumptions? When it comes to designing models I cant help but feel that the logical elegance found in the equations, even the complex ones, cannot realistically represent all the variables that may decide a particular outcome the model sets out to measure and predict. How is it that after more than 300 years of official discipline (if you assume Smith started it, with perhaps 200-150 with solid use of math) economists that are hired for important positions are still unable to accurately predict, for example, the exact ratio outcome of the multiplier or CPI inflation rates (recently Central Banks are raising IRs, but one year ago most mainstream CB officials and mainstream economists were talking about "transitory" inflation, while two years ago some denied M injections would not even cause it)? How is it that HHIs and CRs, perfect competition model assumptions or Tobin's Q sometimes fail to accurately assess whether a particular market is actually competitive or not? My Mankiw-following econ professors (I am not an economist) taught me to outright reject the notion of a natural monopoly and even natural oligopoly. How am I supposed to reject them when certain company examples they gave me like Facebook have lost both valuation and users. How is it that no school of macro or finance accurately predicted events like the 2008 financial crisis while a few Austrians based on the idea that artificial cheap credit and junk mortgages are bad did successfully warn of housing markets being in a bubble? Perhaps the questions here are too complex to answer in just a single comment, but I would appreciate a video where you speak about the limitations of math in economics, to what degree do you think it can be safely used or what is your take on different schools of economic thought. I would assume that, as a microeconomics and game theory channel, you have a positive view of the tool beyond the descriptive use of statistics. Thanks a lot, even if you decide not to respond.

@goodtoGoNow1956 Жыл бұрын

" I highly question the use of predictive models in economics when it comes to making accurate assessments and both the idea that economists stray away from making normative statements or that relying on models is in itself a purely positive position." She does say that economists try to avoid normative statements. But she does not say that relying models is in itself a purely positive position. In fact she says that it is fraught with problems. Relying on models can be positive (I learned it as "descriptive" rather than "positive") EVEN IF THE MODELS ARE INCORRECTLY SPECIFIED because one can simply describe and use the model and its relationships without making any recommendations or suggestions. You might say "Well it is implied", but that implication could (or would) be in your mind and have nothing to do with the model or the economist. Avoidance of any sort of "should" statement is sufficient to get you out of the normative position. Now do economists try to avoid normative statements? I think it depends upon the venue. I think that in the vast majority of published papers, they do. On the other hand, many economists are used by various entities to provide advice and suggestions and recommendations and they immediately move to normative statements at that point. So there you are right. However, she might have been confining her thinking to academic papers, where I think she is more correct.

@waterbloom1213 Жыл бұрын

@@goodtoGoNow1956 Thank you for your answer. I often try to look at the usefulness of the discipline to judge its merits, and economists do tend to hold influential positions in politics more than other types of academics. Hence why I am so uneasy about the discipline because in my policy-oriented view I cannot help but feel that even when we strongly check assumptions models in the end will be used as justification for normative purposes.

@t.kudahjairus281 Жыл бұрын

Thank you

@meloanddiiv1418 Жыл бұрын

Im in love

@ahmedbellankas2549 Жыл бұрын

Suppose that x can y if and only if x g's, and it's impossible for x to to y if x didn't g. And suppose that x is an individual and g and y are acts. And suppose x wants to y and x has not changed his (or her) want. Now suppose i said :if x is rational,then x should g. Is this a normative statement?. Economists are striving for the one explanation for all trade,are they assuming the unification model of explanation ?are they explicit about it and the positive facts that back it up if any?