Academic journal article American Economist

Normative Foundations of Introductory Economics

Academic journal article American Economist

Normative Foundations of Introductory Economics

Article excerpt

Emily Northrop [*]

Abstract

According to Robert Solow, the orthodox model "underplays the significance of ethical judgments both in its approach to policy and in its account of individual and organizational behavior." This paper demonstrates that introductory texts promote, without acknowledgment or debate, the following ethical judgments and value-laden choices are equally meritorious, economic growth is desirable, consumerism, to ignore markets' sometimes coercive nature and the "non-externality" types of harm to third parties, anthropocentrism, the only unequivocal "good" is rearrangements which produce only winners, and to view humans as separate and self-serving entities. These values matter because, as Colander and Landreth write, "The simple textbook models students learn serve as an operating system for their minds ... [and the] models limit students' imagination and consideration of alternatives ..."

Introductory economics texts commonly distinguish between "positive economics" and "normative economics." Typical is the presentation by Campbell R. McConnell and Stanley L. Brue in Economics, the nation's leading elementary text:

Positive economics deals with facts ... and avoids value judgments. Positive economics attempts to set forth scientific statements about economic behavior. Normative economics, in contrast, involves someone's value judgments about what the economy should be like or what particular policy action should be recommended based on a given economic generalization or relationship (1993, 6).

Accordingly, when economists describe how the economy works we engage in positive economics; when we advance specific outcomes we are doing normative work.

Although extensive methodological discussions have thoroughly critiqued this simplistic distinction (e.g., see Eichner 1983), it is only on the most superficial level that authors of the introductory texts relate positive and normative economics. For example, Hall and Lieberman assert, "we cannot properly argue about what we should or should not do unless we know certain facts about the world; every normative analysis therefore contains within it an underlying positive analysis" (1998, 6). It is very rare for the texts to acknowledge other critical, but more subtle, connections between normative and positive economics. William Brown is among the exceptions when he describes the difficulty in clearly separating the two: "Our values determine the questions we ask in the first place, what data we use, and how we conceive the problem. [For example, i]f we believe that unemployment is a serious problem (a normative judgment), we are more inclined to study how to get rid of it (a positive inquiry)" (1995, 18).

There is another type of overlap between positive and normative economics that I cannot find acknowledged in any of nineteen recently published introductory texts. [1] Namely, the basic motivation and orientation of the texts are value-laden, but the authors present these subjective formulations in positive terms. Although the presentations obscure the significant implicit value judgments, these judgments are nonetheless consequential. Because the authors do not recognize the values, these normative elements are not debated and important questions go unaddressed: Whose values are these? Whose interests are served by assuming these values? And, despite the guise of objectivity, by teaching a value-laden perspective economists are promoting these particular values. This prompts the question: To what extent does the conventional presentation of economics affect the values of the undergraduate students?

In this paper I will make explicit the normative foundations of the introductory texts by developing alternatives to the their usual approach. Once the alternative is juxtaposed against the usual presentation, it becomes apparent that the choice of one formulation over others is a subjective and thereby normative determination. …

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