Normative Economics: Difference between revisions
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2) "Economics that tries to change the world by suggesting policies for increasing economic welfare..."[[Sources and Works Cited|[2]]] | 2) "Economics that tries to change the world by suggesting policies for increasing economic welfare..."[[Sources and Works Cited|[2]]] | ||
Normative economics concerns itself not with what is, but with what should be. It is concerned with the ends rather than the means. Normative economics relates to the philosophical implications of economics specifically value judgements and ethics. | |||
==History== | ==History== | ||
Revision as of 20:34, 1 May 2007
Definition
1) "...A body of systematized knowledge discussing criteria of what ought to be...; a system of rules for the attainment of a given end." [1]
2) "Economics that tries to change the world by suggesting policies for increasing economic welfare..."[2]
Normative economics concerns itself not with what is, but with what should be. It is concerned with the ends rather than the means. Normative economics relates to the philosophical implications of economics specifically value judgements and ethics.
History
Famous Normative Economists
Amartya Sen
In Economic Behavior and Moral Sentiments Sen discuss the distancing that has occured between normative and positive economics, which he believes is one of the major detriments to modern economic theory. For Sen "the nature of modern economics has been substantially impoverished by the distance that has grown between economics and ethics." He agrues that ethical considerations have a bearing on human behavior and that influencing human action is a core part of ethics. Since welfare economics must have some role in affecting actual behavior ethics should have a greater role in welfare economics. Yet, historically, logistical (what Sen terms positive economics) has been allowed to greatly influence welfare economics, while the role of ethics in this topic has been largely ignored. There has been significant progress made by logistical approach in economics and much of it because the logistical approach has been so broadly used. Sen argues though that welfare economics can benefit greatly from the inclusion of ethical considerations. Descriptive economics, prognosis, and policy suggestions can all be improved by the inclusion of ethics. The study of ethics itself will also be further be enriched by the addition of economics as an area on inquiry.
Figure 1: A graph of efficiency vs. fairness[3]
