Positive public economics: reinterpreting ‘optimal’ policies

Journal of Economic Methodology 24 (1):90-103 (2017)

The standard positive/normative divide fails to capture the way economists use ‘optimal’ taxation models. This paper argues that the better way to understand public economics is through a three-part division between positive, normative, and instrumental models. An instrumental model is about means and ends. Once this additional dimension is acknowledged, one can see that ‘optimal’ taxation models are closely connected to what are generally seen as purely positive models. I argue that economists have been using similar standards to assess ‘optimal’ taxation models as they use to assess positive models. Recent advances in optimal taxation theory have embraced the positive aspects of models, even about social welfare functions, something that is generally classified as a normative.
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DOI 10.1080/1350178X.2017.1279741
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Credible Worlds: The Status of Theoretical Models in Economics.Robert Sugden - 2000 - Journal of Economic Methodology 7 (1):1-31.
Economic Models.Allan Gibbard & Hal R. Varian - 1978 - Journal of Philosophy 75 (11):664-677.
Making Sense of Economists' Positive-Normative Distinction.David Colander & Huei-Chun Su - 2015 - Journal of Economic Methodology 22 (2):157-170.

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