Economics as a social science, the use of models and ceteris paribus, positive versus normative statements, and the role of value judgements in economic decision making.

What this dot point is asking

AQA wants you to understand that economics is a social science that uses models, to apply the assumption of ceteris paribus, and to distinguish clearly between positive statements (testable claims) and normative statements (value judgements). You also need to see how value judgements influence economic decision making and policy choice. This methodology underpins how you evaluate every later argument.

Economics as a social science

Economics studies the behaviour of people, firms and governments as they make choices under scarcity. It is a social science because it applies the scientific method, observation, hypothesis, testing, to human behaviour rather than to the physical world. Like other sciences it builds models, which are deliberate simplifications of reality that strip away detail so we can focus on the key relationships.

Because economists usually cannot run controlled laboratory experiments on whole economies, they rely on assumptions and on natural experiments and statistical evidence instead. The most important simplifying assumption is ceteris paribus.

For example, the law of demand (a fall in price raises quantity demanded) holds only ceteris paribus: we assume income, tastes and the prices of related goods do not change at the same time.

Positive and normative statements

Positive statements describe what is, was or will be; normative statements describe what should be. A reliable test is to ask whether evidence alone could settle the claim. If it could, the statement is positive; if it depends on someone's values, it is normative. The presence of numbers does not make a statement positive: "the deficit should be cut to 2 percent of GDP" is normative because of the word "should".

The role of value judgements

Value judgements influence economic decision making because views about what is desirable shape which policies are recommended. Two economists may agree entirely on the positive effects of a policy, for example that a carbon tax reduces emissions but raises costs for firms and consumers, yet disagree on the normative question of whether it should be introduced, because one prioritises the environment and the other prioritises growth or fairness.

Value judgements also affect which questions economists choose to study, which data they collect, and how they interpret trade-offs between efficiency and equity. Recognising this is central to balanced evaluation in the exam.