Economics, 3rd Edition

THE ECONOMIST AS POLICY ADVISOR

Often economists are asked to explain the causes of economic events. Why, for example, is unemploy-

ment higher for teenagers than for older workers? Sometimes economists are asked to recommend 

policies to improve economic outcomes. What, for instance, should the government do to improve the 

economic well-being of teenagers? When economists are trying to explain the world, they are scientists. 

When they are trying to help improve it, they are policy advisors.

Positive versus Normative Analysis

To help clarify the two roles that economists play, we begin by examining the use of language. Because 

scientists and policy advisors have different goals, they use language in different ways.

For example, suppose that two people are discussing minimum wage laws.

Pascale: Minimum wage laws cause unemployment

Sophie: The government should raise the minimum wage

There is a fundamental difference in these two statements. Pascale’s statement is spoken like that of a 

scientist: she is making a claim about how the world works. Sophie is speaking like a policy advisor: she 

is making a claim about how she would like to change the world.

Pascale’s is making a positive statement.