Question

Discuss using relevant arguments how the use of both normative and positive analysis will enhance formulation, implementation and evaluation of the two of the following public policy programs?

1. Poverty Benefit Scheme

2. Micro Small Business Grant (MSBG) Scheme

Answer 1

Introduction:-

To understand this concept in a better manner, it is important to know what normative and positive analysis in economics refers to.

Positive economics is based on facts and figures and uses statistical tools and measurement techniques to arrive at a conclusion. Those making decisions using positive economics take examples from real life and rely heavily on established set of policies regarding various economic considerations. This helps them in arriving at a conclusive result respectively.

On the other hand, normative economics is a different branch of economics which focusses its attention on how an ideal society should be therefore it is more descriptive in nature.

While coming at conclusive decision making, economists use both methods to analyze and choose among various options which are available at any point of time.

Case Specifics:-

The case herein focuses on Poverty Benefit Schemes and Micro Small Business Grant Schemes and how positive and normative analysis can help in formulation, implementation and evaluation of the same.

The following are the specifics:-

Poverty Benefit Schemes & Micro Business Grant Scheme:-

Each society and government finds the need to elevate normal citizens from poverty. This is needed to ensure a balance in the economy and a shift from people being poor to having greater access to modern living, health, education and other facilities respectively.

On the other hand, micro small business grant schemes are required to help give a boost to small industries or enterprises and help them towards their path of success

The following are the methods through which both positive and normative economics help in the same.

Formulation:-

The formulation of poverty benefit schemes and micro business grants like any other take the help of both normative and positive analysis. Normative analysis helps in describing the problem at hand and a positive one gives a correlation between what economists plan and what they actually need to do considering statistical measures and data in mind.

Examples:-

With the help of normative economics the areas which need to improve can be analyzed. Normative analysis helps in describing how a particular section of the society needs to be and hence helps in giving shape to poverty benefit schemes. While for Micro small grants it can help in giving definition to the scheme and telling how an ideal scheme should look like and what results it is seeking to achieve.

Positive economics on the other hand, can help by giving statistics and defining measures it gives a correlation between how these policies have helped in the past and gives projections on results.

Thus both the practices can help in giving direction to the formulation process of the policies.

Implementation:-

Again in this case, normative analysis will help us in defining how an ideal poverty benefit scheme or a micro small grant scheme should be implemented. While positive analysis would help us in analyzing the steps to be taken in an imperial and defined manner.

The relationship in this case would be such that normative economics would help in giving the dimensions of implementing such a plan whereas positive would back this by raw statistical measures respectively.

Positive analysis would help in defining how previous policies have helped and elevated people out of poverty and reflect on actual statistics on micro small business schemes previously implemented also. Whereas normative would take the shape of giving ideas on how this can be molded for the specific economy/state in which it is being implemented.

Evaluation:-

The evaluation of both the policies would be largely helped by both positive and normative analysis. Once implemented a normative analysis would allow for defining the measures needed to control the policies and take corrective action as and when required.

On the other hand, positive analysis would allow for a statistical measure to critically identify if or not the policy was a success by measuring the results.

Conclusion

For example, formulation of a poverty elevation policy or one which seeks to empower micro businesses would require careful insights which come from normative analysis. It helps in defining how the society should ideally be.

On the other hand, the role of positive analysis would be to clearly demarcate the boundaries in which the policies would be implemented and closely monitoring the same with actual data which is collected respectively.

Please feel free to ask your doubts in the comments section.