1. 1.1.6 Value judgements, positive and normative statements What is the difference between these 2 statements? His new car is green His new car is a terrible shade of green AQA E CON 1: M ARKETS AND MARKET FAILURE

2. 1.1.6 W HAT YOU NEED TO KNOW  Candidates should be able to distinguish between positive and normative statements  They should understand how value judgements influence economic decision-making and policy

3. P OSITIVE STATEMENTS  Positive statements are objective, factually based comments that can be tested  They are not influenced by the opinion or prejudice of people  They allow scientific testing to take place that can be accepted or rejected  For example, the unemployment rate is 8% is a positive statement because it is based on factual evidence Positive statements are impartial or unbiased. Analysis should be based on positive statements i.e. they should be based on factual evidence.

4. N ORMATIVE STATEMENTS  Normative statements are subjective, questionable comments that are difficult to test  They are influenced by the opinion or prejudice of people  For example, the government should increase spending to help reduce the unemployment rate  Normative statements require value judgements  A value judgment is a statement that has been put forward by an individual that cannot be verified factually Normative statements are partial or biased. Value judgements are opinions put forward by individuals that are difficult to test. Many students use normative statements which undermine the validity of their arguments. Evaluation is based on value judgements. However, these judgements should derive from prior analysis.

5. P OSITIVE AND N ORMATIVE PositiveNormative Politician News reporter Sports commentator Teacher In pairs identify examples of when these professions use positive and normative statements. Identify positive and normative statements used in this BBC news article.

6. V ALUE JUDGEMENTS INFLUENCE ECONOMIC DECISION - MAKING AND POLICY  Economic agents have to choose between alternative options  For every decision made there is an opportunity cost  Basing decision-making on positive statements is likely to lead to certain outcomes e.g. increasing the price of a normal good will reduce demand  However, the future by definition, is uncertain  This means that choices have to be made that will lead to uncertain outcomes  Economic decision-making and policy are based on both positive economics and value judgements

7. Q UICK TEST  Which of the following is a positive statement a) The government should reduce the unemployment rate to below 7% b) The inflation rate has been above the government target of 2.0 % for over a year c) Society should take greater care of the elderly d) There needs to be a change of government to improve the performance of the economy Can you explain your answer?

8. P OSITIVE AND NORMATIVE STATEMENTS  Write one positive and one normative statement about:  Today’s lesson  The UK economy  Production possibility diagrams