Friday, June 20, 2008

The art of economics

Environmental economists too, are struggling with doing "objective" science with a rather "normative" goal of protecting the environment. Recently there was a discussion about positive vs. normative economics on the Resource Econ list-serve. Nothing particularly refreshing other than this comment from Rich Woodward.

Following on John Neville Keynes' writings, David Colander argues that economics should be broken into 3 categories: Positive Economics, Normative Economics, and The Art of Economics.

"According to Keynes, positive economics is the study of what is and the way the
economy works; it is pure science, not applied economics. Normative economics is
the study of what should be; it is not applied economics. The art of economics is
applied economics. It relates the lessons learned in positive economics to the
normative goals determined in normative economics." (J. of Econ. Perspectives, 1992, p. 192)

This tripartite structure is more honest and gets us out of the uncomfortable position in which we try to shoehorn our work, often riddled with normative assumptions, into a positive mold. This means then that examples of positive analysis are quite limited, especially within environmental economics where a normative structure is so deeply embedded in so much of our analysis.


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