Pros and Cons of Positive Economics - Deepstash
Pros and Cons of Positive Economics

Pros and Cons of Positive Economics

Pros:

  • based on objective data and fact are at our disposal to back up any claims
  • there are no value judgments in positive economics which allows policymakers to formulate the appropriate measures necessary to tackle any economic conditions

Cons:

  • not everyone is concerned with the facts and there are certain economic conditions that we can base on emotions; economics isn't an exact science, therfore there are no fool-proof solutions
  • positive economics is not a one-size-fits-all approach. policies and solutions that arise from positive economics don't affect everyone the same way

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History of Positive Economics

The history of positive economics can be traced back to the 19th century from the ideas of John Neville Keynes and John Stuart Mill, who were early economists. 

Keynes believed that logic and methodology were imperative in the study of economics while Mill was an economist who blended economics with philosophy. Mill also approached economics from data, such as the relationship between supply and demand, rather than the value perspective approach.

Later on, these ideas were adapted by contemporary economists and developed observations to back early economic theories.

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Positive Economics

Positive Economics is a stream of economics that focuses on the description, quantification, and explanation of the developments in economics, the expectations, and the associated phenomena. It heavily relies on objective data analysis, relevant facts, and associated figures.

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Normative Economics

Normative economics is what economists call as "what should have been" or "what ought to be" study. This stream of economics aims to determine people's desirability or lack thereof to various economic programs, situations and conditions by asking the questions: what should happen or what ough to be.

It leaves the door open for future changes, eliminates absolute statements, and provides an avenue for discussion. 

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Keynesian Economics

John Maynard Keynes (1883-1946) was interested in the level of national income and the volume of employment rather than in the equilibrium of the firm or the allocation of resources. 

He was still concerned with the problem of demand and supply, but “demand” in the Keynesian model means the total level of effective demand in the economy, while “supply” means the country’s capacity to produce. When effective demand falls short of productive capacity, the result is unemployment and depression; conversely, when demand exceeds the capacity to produce, the result is inflation.

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Adam Smith: the father of modern economics

Adam Smith was an 18th-century Scottish economist, philosopher, and author. He is considered the father of modern economics.

  • Smith was born in 1723 in Scotland. He studied moral philosophy at the University of Glasgow and enrolled in postgraduate studies at the Balliol College at Oxford University.
  • After returning to Scotland, Smith held a series of public lectures at the University of Edinburgh and earned a professorship at Glasgow University in 1751. Later he earned the position of Chair of Moral Philosophy.
  • In 1763, he accepted a more remunerative position in France. There, Smith counted philosophers David Hume and Voltaire as contemporaries.

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Social Economics

Social Economics is a branch of economics and social sciences that puts focus on studying and analyzing the relationship between social behavior and economics.

It attempts to explain how a particular social group or social class behaves within a society and this includes their actions as consumers.

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