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Monday, November 28, 2005

Positively Normative Economic Analysis

One thing I have always liked about economics is its attempt to separate positive and normative analysis to be as scientific as possible. Here are definitions of positive and normative economics from Wikipedia:

Positive economics, value-free economics ... is the part of economics that focuses on facts and cause-and-effect relationships. It includes descriptions, development and testing of economics theories. Positive economics avoids value judgments. It tries to establish scientific statements about economic behavior and deals with what the economy is actually like. For example, a positive economic theory might describe how interest rate affects inflation but it does not provide any guidance on whether what policy should be followed. ...

Normative economics is the branch of economics that incorporates value judgments about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal. Normative economics looks at the desirability of certain aspects of the economy. It underlies expressions of support for particular economic policies.

And this is how Wikipedia describes a positive science:

Positive science: ...The term positive lies at the heart of one of the major epistemological debates in the humanities and social sciences. Positivists ... advocate a 'value-free' approach to the study of humanity that shares much in common with methods employed in the natural sciences. Positivists seek only to make objective descriptions of humanity and society without making normative judgments. In contrast non-positivists reject the notion that the methods of the natural sciences are adequate in explaining and describing humanity and society - this is primarily because of the 'meanings' that humans attach to their actions. They believe that it is not possible to be completely value-free in their study, as a person cannot stand totally removed from their place within space and history.

In the classroom, I am as careful as I can be to do positive economics and avoid normative. It's not entirely possible to avoid normative analysis though, and one could "positively" ask questions such as "What are the negative impacts of the Bush tax increase," "What are the negative effects of budget deficits," "How much additional inequality is there in the income distribution in recent years," "Is there any evidence that tax cuts actually pay for themselves," and so on. Each question is analyzed factually, but the totality leaves a clear normative impression. The questions you ask are dictated to some extent by value judgments, the topics one chooses to cover in class are a judgment call as well - normative elements are always present. I feel a strong professional obligation in the classroom (and in research) to avoid politics and one-sided presentations when there is any question over the theory or empirical results. I know it's only an ideal, but it seems one worth striving for even if it cannot be perfectly achieved. Other disciplines do not seem to have this boundary. I wonder though, is my opinion more valuable than someone else's on economic matters? What about outside my area, do I have special insight? If I am a professor of English or biology, does my opinion on the war matter? As an economist, what do I add to the abortion debate beyond the economics?

If a policy makes everyone better off and nobody worse off (perhaps after transfers between people), then I can be an advocate for the policy. But if the policy makes some people better off and others worse off, even if it's a single individual, then all I can do is document the effects. I cannot judge whether the losses of one group are larger or smaller than the gains of another. That is what the political process is designed to do, make decisions when there are winners and losers. An economist's job is to advise what the gains and losses are, not decide if they are just.

But it's frustrating to never be able to state one's own views, let alone with the passion they are held. And this goes beyond the classroom or research. I cannot, in my capacity as a state employee, even take a position on an initiative or a candidate for political office. In Oregon I can talk politically from 12-1 during lunch hour and wear a lapel pin not to exceed a size governed by law, but not outside of that - e.g. I cannot write a letter to the local paper and say a particular initiative or proposed economic policy makes no economic sense and sign it as a member of the Economics Department at the UO (though I could sign just my name without the Department and University affiliation and that would be okay).

So I have a blog, and the word "View" in the blog's title was chosen very deliberately. But I find it hard to be overly political. I manage, I have my moments, most of you know how I lean, but I often find myself slipping into a passive voice that simply presents material without judging it, "Here's an article on x, y, and z for you to read" and I've tried to stick, mostly but not exclusively to economics (You have no idea how many times I've wanted to post on some stupid politician, etc.). I think about this distinction a lot and even thought about creating positive and normative tags for posts, but I would debate myself endlessly trying to figure out if I could actually tag something as positive analysis, and if I did, someone would object.

I'm not sure what the purpose of this post is other than to talk about an issue that's bothered me since I started doing this. I want to give my opinion, just go off when things bug me, but when I do it feels unprofessional so it's been fairly tempered (not always). I think the purpose is twofold. First, to acknowledge this is not an attempt to do purely positive analysis as I would in my research, this is also normative, and I am not going to be particularly careful day to day to try and separate the two. Somehow saying that makes it easier to do. But, economics will always trump politics. Second, to raise the issue of whether the positive/normative distinction remains as important to the profession as it once was, or have these lines become blurred both in academics and in government positions such as economists working for the Council of Economic advisors? Is it a mistake for economists to engage in normative debates? Does it undermine our ability to make positive analyses and arguments to the public and to policymakers? I worry that it does.

Finally, in the value free tradition, I do not mean to judge any other econ blogger, not in the least. In fact, I would be pretty disappointed if you didn't give your opinions. That's the best part.

Update: The liberal bias police are active:

Teacher accused of giving 'liberal' quiz, CNN: A high school teacher is facing questions from administrators after giving a vocabulary quiz that included digs at President Bush and the extreme right. ... One example: "I wish Bush would be (coherent, eschewed) for once during a speech, but there are theories that his everyday diction charms the below-average mind, hence insuring him Republican votes." "Coherent" is the right answer. ... School Superintendent Wesley Knapp said he was taking the situation seriously. "It's absolutely unacceptable," Knapp said. "They (teachers) don't have a license to hold forth on a particular standpoint." Chenkin, 36, a teacher for seven years, said he isn't shy about sharing his liberal views with students as a way of prompting debate, but said the quizzes are being taken out of context. "The kids know it's hyperbolic, so-to-speak," he said. "They know it's tongue in cheek." But he said he would change his teaching methods if some are concerned. "I'll put in both sides," he said. "Especially if it's going to cause a lot of grief." ...

If he also includes digs at the left, does that make it okay?

    Posted by on Monday, November 28, 2005 at 12:06 AM in Economics, Methodology, Politics | Permalink  TrackBack (0)  Comments (5)


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