Normative Economics
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]
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.
Figure 1: A graph of efficiency vs. fairness[3]
