Economic Methodology

Economics is classified as a social science because it studies human behavior using systematic methods of observation, theory-building, and testing. Unlike the natural sciences, where researchers can often run controlled laboratory experiments, economists usually study a complex world in which many variables change at once and where people do not always behave predictably. This makes the methods economists use both fascinating and, at times, controversial.

Positive versus normative statements

A crucial distinction in economic reasoning is between positive and normative statements. A positive statement is one that can, in principle, be tested against evidence and shown to be true or false. For example, "A rise in the price of gasoline reduces the quantity demanded" is a positive statement b