The Role of Normative Judgments in Economic Science

Vladimir Peovski
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Vladimir Peovski: Sofia University, Bulgaria

Ikonomiceski i Sotsialni Alternativi, 2014, issue 1, 108-119

Abstract: The article explores the relationship between positive and normative components of economic theory. In the beginning interpretations of philosophy of science of the positive and normative judgments are presented and how they relate to scientific knowledge. In positive thinking we distinguish empirical from theoretical reasoning, and in normative - characteristic (methodological) from value judgments. Special attention is paid to the role of the methodological norms for the formation of positive theories. The second paragraph presents accepted by most economists principles of methodological instrumentalism and methodological individualism. They provide the logical reasoning of the postulate of rationality - the most important component of the core of the neoclassical research program. The third paragraph is devoted to the normative economic theory, presented by the welfare economics. The main methodological problem faced by the ones that are working in this branch of the economic science is to compare the usefulness of different individuals and their aggregation. The Pareto criterion is not a satisfactory solution because it is irrelevant to the distribution of benefits consequently additional criteria for social welfare are needed. Theory of social choice warns that if individual preferences are quite different, it would be very difficult to move from the individual level of utility to the level of social welfare in the construction of a social welfare function. Public choice theory focuses on procedures for political decision making on the selection of institutions that allow easier consensus among voters. In the end it is concluded that taking into account various aspects of the regulatory context is difficult to accept the dichotomy positive - normative, as the result of its implementation can lead to a sharp reduction in utility that economics brings in relation to the solution of practical tasks, including the supply of principles of economic policy.

JEL-codes: B40 B41 D70 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:nwe:iisabg:y:2014:i:1:p:108-119

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