Tuesday, January 18, 2005
Aquinas would be surprised
Or, sketchy econ.
Normative questions deal with what is better or worse. No theory can answer normative questions. Try asking a physics teacher which is the better or worse state: a solid, gas, liquid or plasma state. He'll probably look at you as if you're crazy. On the other hand, if you ask your physics teacher which is the cheapest state for pounding a nail into a board, he'd probably answer that the solid state is. It's the same with economic theory, as opposed to economists. That is, if you asked most economists which method of conflict resolution produces the greater overall wealth, they'd probably answer that the market mechanism does.
The bottom line is that economic theory is objective or non-normative and doesn't make value judgments. Economic policy questions are normative or subjective and do make value judgments — questions such as: Should we fight unemployment or inflation, should we spend more money on education, and should the capital gains tax be 15 percent or 20 percent? It's in the area of value judgments where there's so much disagreement among economists.
The problem with statements like these is that not everyone agrees on what economic theory actually is. We may be able to agree that a price in a certain town is thus, but to answer the why requires not math, but psychology, and that becomes murky water very fast. Caveat lector.
Normative questions deal with what is better or worse. No theory can answer normative questions. Try asking a physics teacher which is the better or worse state: a solid, gas, liquid or plasma state. He'll probably look at you as if you're crazy. On the other hand, if you ask your physics teacher which is the cheapest state for pounding a nail into a board, he'd probably answer that the solid state is. It's the same with economic theory, as opposed to economists. That is, if you asked most economists which method of conflict resolution produces the greater overall wealth, they'd probably answer that the market mechanism does.
The bottom line is that economic theory is objective or non-normative and doesn't make value judgments. Economic policy questions are normative or subjective and do make value judgments — questions such as: Should we fight unemployment or inflation, should we spend more money on education, and should the capital gains tax be 15 percent or 20 percent? It's in the area of value judgments where there's so much disagreement among economists.
The problem with statements like these is that not everyone agrees on what economic theory actually is. We may be able to agree that a price in a certain town is thus, but to answer the why requires not math, but psychology, and that becomes murky water very fast. Caveat lector.
