Positive Economics

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DEFINITION of 'Positive Economics'

The study of economics based on objective analysis. Most economists today focus on positive economic analysis, which uses what is and what has been occurring in an economy as the basis for any statements about the future. Positive economics stands in contrast to normative economics, which uses value judgments.

BREAKING DOWN 'Positive Economics'

For example, a positive economic statement would be: "Increasing the interest rate will encourage people to save." This is considered a positive economic statement because it does not contain value judgments and its accuracy can be tested.

Most of the information we hear in the media today is a combination of positive and normative economic statements or theories. Because of this, investors should always be careful to separate out what is objective and what is subjective analysis.

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