What is a positive economy? -InvestBro

Did you know that many economics courses at different campuses? In Indonesia, strong mathematical and statistical skills are required. Therefore, it is not surprising that many The campus offers new students the opportunity to major in Natural Sciences (IPA) during high school. Compared to freshmen with an IPS basis in entering this major. Although IPS graduates already have these subjects .

This can happen because many campuses want their students to have a positive data-based economic approach. The goal is that campus graduates can make policy recommendations that are not only normative or theory-based. but also based on data.

Gain a positive understanding of the economy.

Positive economics is an economic view taking an unbiased approach based on the latest data. In contrast to normative economics The question to be answered in this approach is “What is the current economic situation?”

to answer this question Researchers need to invest in collecting and processing the latest data. Then use the results of these audits to formulate policies, solutions or strategies to improve future economic conditions.

The basic assumption used in this approach is the assumption that human beings are rational creatures and that they make decisions based on the information they receive. Data-based reasoning behavior is an example. If you like apples over oranges, for example, and orange like guava You will like apples more than guava.

Positive economic history can be traced back to the mid-19th century. At that time, two British scientists, John Stuart Mill and John Neville Keynes, believed that the use of data, logic and methodology were important in economic analysis.

This understanding was further developed by American scientist Milton Friedman in the 1950s. In a paper he published in 1953, Friedman stated that the goal of positive economics was to provide accurate analyses. It is necessary and meaningful to make accurate economic forecasts. Tested and matched to empirical data, therefore, government policy outcomes are at low risk of conflict. To allow policy makers and experts to formulate the best policies for the future economy.

How does a positive economy work?

in positive economics Analysis is done by drawing cause-and-effect relationships. For example, expanding the landfill area in Area A decreases the average house price in Area A by one percentage point.

The cause-and-effect relationship can then be simplified by using a statistical model based on certain assumptions. The housing in the area is decreasing and the prices are also going down. This assumption is not built solely on estimates. But with prevailing economic theory and previous studies,

The most commonly used models are linear regression. To use this method The researchers need to further acknowledge that the analyzes they use may not represent all conditions in the field. This is because the model is only to simplify the conditions in the field.

The conclusion will come from the analysis results. The researchers’ conclusions about this positive economy can be tested by other researchers and interested parties. It is therefore not surprising that many researchers with the same positive economic research object have different analytical results.

An example of a positive economy

Setting a regional minimum wage (UMR) has always been a hot topic in the Indonesian economy. Many consider the increase in standard salary (UMR) to be inconsistent with the increase in the price of basic goods. This community statement is an example of normative economics. As this is my personal opinion and not based on information.

Good or bad, increasing the minimum wage will turn out to be a positive economic study. If there was a thorough research that analyzed the impact of raising the minimum wage on the growth or purchasing power of society as a whole. The conclusions of this analysis are uncertain and can be subject to criticism by other studies.

Another example is the assumption that getting a longer education or better educational facilities can improve the economic condition of a family or even a country. This statement would remain a normative statement in economics if not adequately researched.

in Indonesia itself Research on the impact of education on the economy was carried out by Harvard scientist Esther Duflo in 2001. The winner of the Economics Award noted that the construction of 61,000 INPRES Elementary Schools in the Methodist era. New successfully added Indonesia’s economy 6.8-10.6 % Duflo’s findings become one of similar studies both at home and abroad.

Pros and Cons of Positive Economy

strength:

1. data driven As a result, positive economics is quite objective. Easy to check and backtest
2. Give policymakers the ability to make appropriate policies.. With continuously updated information A positive economy allows governments or other regulators to create more effective economic policies and strategies. Positive economics also allows the individuals involved to take the necessary assessments.
3. It gives individuals the opportunity to make more rational economic decisions.For example, with research predicting an economic slowdown in 2023, individuals can prepare immediately by increasing their emergency fund capacity.

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1. Human beings are not completely rational.There are times when emotions influence a person’s economic decisions. For example, you fall in love with a woman who is a foreigner’s boyfriend. So you may be willing to buy or eat a foreigner in front of her. Even if you don’t like it.
2. Economics is not an exact science.. despite the many mathematical and statistical aspects But economics is still part of the social sciences. As a result, there is no fixed solution or conclusion. For example, potential economic crisis may increase demand government bond in the United States. However, for whatever reason The potential for an economic crisis may not affect bond demand in Indonesia either.
3. There is no single solution for everyone.It may be that a government’s economic policies are based on facts and information. However, these positive economic outcomes policies may not have the same impact on all levels of society. It has been updated and remains accurate. so that the results of economic policies continue to improve from time to time