What Is The Difference Between Positive Law And Normative Law In Economics?

Both these principles deal with the economic analysis of law, a field which is most often discussed in terms of positive law and economics or normative law and economics. These concepts are discussed in theoretical terms so as to predict the development of various legal rules. Whether or not either of these analytic tactics make any sense or work when used in the real world is up to the individual to decide. The data supplied on the subject is endless.
Positive law and economics is used in an attempt to predict how legal rules and regulations will affect the efficiency of the economy or legal actions. Positive economics is often described as more objective, steeped in empirical fact. It is used to explain the behavior of those who write our laws or carry them out.

Normative law and economics is a little bit different. Although the former principle will sometimes try to explain how those rules and regulations develop, normative law and economics will actually attempt to use the predictions and explanations of economic consequence in order to recommend new policy. Here, this principle is used in order to increase or maintain efficiency. Normative economics is often described as more subjective, steeped more in a value system. This makes it almost impossible to prove or disprove, which leads to endless argument.

The idea that economic analysis of law can influence judicial opinions isn’t a new concept. It’s relatively routine in the United States and is becoming more routine in Europe as well. Education in the subject is just as common.

These principles are just as often criticized for their real-world value. Rational choice theory presents the case that normative law and economics analysis almost disregards the fundamental human rights that are so important to this country and its historical growth, and relates concerns that these rights could be encumbered.

Another criticism occurs in the form of pareto efficiency. This critique relates that any activity made in order to increase efficiency is just as likely to result in a decrease in efficiency. In addition, what one group might view as an optimal result can differ from another group.