The Positive/Normative Distinction In Economics Is Nonsense But It Doesn’t Really Matter

Via Mark Thoma, Dan Little writes about a new volume from Vivian Walsh and Hilary Putnam titled The End of Value-Free Economics.

I’m glad Hilary Putnam is involved because I haven’t actually read the book, but have long thought that the distinction between so-called “positive” and “normative” economics is largely illusory precisely because I have read Hilary Putnam’s The Collapse of the Fact / Value Dichotomy and it’s completely persuasive. But that Putnamish take on the issue is important. The reason you can’t rigidly separate positive from normative economics is that you can’t rigidly separate claims of fact from claims of value in general. Human language is too laden with thick concepts that mix the two. The claim that someone is a “slut” or a “bitch”, for example, melds together factual claims about a woman’s behavior with a lot of deeply embedded normative concepts about what constitutes appropriate behavior for a woman. The claim that financial markets are “efficient” is both an effort to describe their operation and a way of valorizing them. The idea of a “recession” or “full employment” or “potential output” all embed certain ideas about what would constitute a normal arrangement of human economic activity. We sometimes measure the “working age population” which is a kind of normative claim about schooling and retirement arrangements. You could try to rigorously purge your descriptions of the economy of anything that vaguely smells of a thick moral concept, but you’d find yourself operating with an impoverished vocubulary unable to describe human affairs in any kind of reasonable way.

That is all, I think, true and important. But it’s also important to keep in mind that this is a fact about human language and therefore any effort at description rather than a fact about economics as such. I think a lot of people who think they disagreement with most mainstream economists about certain things have noticed that most mainstream economists hold a somewhat naive metaphysical position and think that if they can debunk this metaphysical position they’ve vanquished the beast and now the doors are wide open to a utopia in which economists’ critiques of their policy ideas have all been debunked. But there’s something faulty about that inference. If mainstream economists are making a mistake in their analysis of the economy, you’ll show that by engaging with their analysis of the economy not by engaging with their slipshod freelancing in metaphysics.

At the same time, even though the strong distinction between positive and normative economics doesn’t hold up, rough-and-ready versions of it do hold up. Like you and I might disagree on the normative claim that “the Height of Buildings Act in DC should be repealed” while still hoping to agree on the positive conclusion that “repealing the Height of Buildings Act would increase the square footage of leasable office space in downtown DC.” I think both of those claims are correct, but one is an economic analysis and the other is an analysis plus a lot of other things.