Episode 5: Positive vs Normative NARRATOR: It's crucial as an economist, or any analyst for that matter, that you can distinguish between positive analysis and normative analysis. Positive analysis is factual analysis; the analysis of what is. You can recognize a positive statement because it can be tested; it can be proven, or disproven. There are no personal judgments involved. For example, I can tell you that it is 72 degrees outside today, and you can verify that my statement is true (or untrue). Normative analysis, on the other hand, is opinion-based analysis -- the analysis of what should be or ought to be. We can recognize a normative statement because it involves personal judgments or ideals; it cannot be proven or disproven. When I tell you the orange is better than red, can you verify this? Can you test it? Can you prove it, or disprove it? In the end, we need both types to make policy. The think-tank groups engage in positive analysis, and then turn their findings over to the policy makers, who use this information (along their own judgment) to create policies that they feel are best for society. If you happen to disagree with their policies, then you can vote for someone else. Take a look at a headline from today's news. Can you distinguish the positive statements from the normative statements? NEXT TIME: Graphs