Published Oct 25, 2023 Normative economics is the branch of economics that involves subjective judgments, opinions, and value judgments about what the economy should be like. It is concerned with formulating and recommending policies and actions to achieve certain economic goals. In other words, it focuses on what people believe ought to be done in the economy, rather than what is currently happening. Let’s say there is a debate about whether the government should increase the minimum wage. Proponents of the increase argue that it would help reduce income inequality and improve the standard of living for low-wage workers. They might use normative economics to support their position by making value judgments about fairness, social justice, and the importance of providing a livable wage. On the other hand, opponents of the increase might argue that it could lead to job losses and reduced business profitability. They may use normative economics to support their position by emphasizing the importance of free market principles and individual choice. Both sides of the debate are using normative economics to make arguments based on their subjective viewpoints and values. They are not solely relying on objective facts and data, but rather on their beliefs about what should be done in the economy. Normative economics plays a crucial role in shaping economic policies and decisions. It helps policymakers and individuals evaluate different courses of action and make choices based on their values and goals. However, it is important to recognize that normative economics is subjective and can vary across individuals and societies. Different people may have different beliefs about what is desirable or fair in the economy, leading to diverse policy preferences. Understanding normative economics helps us analyze and discuss the trade-offs and implications of different policy choices and fosters informed decision-making in the field of economics.Definition of Normative Economics
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Why Normative Economics Matters
Economics