Hall & Lieberman’s Economics: Principles and Applications (5th ed, 2010,8-9) says: “Positive economics explains how the economy works, plain and simple…A statement need not be accurate or even sensible to be classified as positive.” Their key here seems to be: “it’s about how the economy works and its accuracy can be tested by looking at the facts–and just the facts.” So there is this sense of using positive economics to stake a Popperian claim to economics as testable science. They go on to say: “Normative economics prescribes solutions to economic problems. It goes beyond just “the facts” and tells us to make judgments about different outcomes and therefore depends on our values.” Hall and Lieberman then discuss the problems with crafting value-free policy.

Roger LeRoy Miller’s Economics Today: The Micro View (13th ed, 2006, 10-11) starts off by claiming the high ground: “Economics uses positive analysis, a value-free approach to inquiry. No subjective or moral judgments enter into the analysis.” Then he waffles a bit, arguing that because economics studies human behavior, “That makes it more difficult to stick to what we consider to be value-free or positive economics without reference to our feelings.” Miller goes so far as to warn students to be on the lookout for normative statements slipped into textbooks: “In fact, the very choice of which topics to include in an introductory textbook involves normative economics.” Here, we find an almost Kuhnian social construction approach; Miller does not quite go so far as to say “Economics is written by the winners, who sometimes get it wrong, at least for a while” but instead, backs off and, subtly, doubly insulates us from blame since we are human and we study human behavior.

If policy is based on dogma, the received wisdom of the decades, and not on just the facts, then who can blame economists! Let’s blame the politicians! Perhaps we are reluctant to make public normative judgments lest we be held accountable when those judgments form the basis for reporting standards or government policies which fail.

“I try to describe what will be determined by economic and political forces. ” ….

“It is certain that we will never have an effective uniform set of international accounting standards.” …

“…while there will be a standard-setting body there will also be private alternatives….”

Whether these predictions are correct or not, I wouldn’t call them “normative.” Rather, they are conjectures that can possibly be disproved.

Whether that is the paper KRS want to write is a different question — it seems like a pretty different exercise.

The preference for positive rather than normative research in economics is usually traced back to Friedman’s (1953) “The Methodology of Positive Economics” in his book “Essays in Positive Economics,” which became a (the?) core reading in the economics methodology canon. Friedman argued that economists have no expertise in subjective judgments and should therefore focus on objective facts (as paraphrased in the W&Z quote above).

However, as Coase (1982) “How Should Economists Choose?” points out, it is ironic that Friedman’s paper is itself a normative rather than positive study of economics research. Friedman recommends that economists do positive research rather than normative research. But if you look at how economists (or accountants) motivate their papers and choose their research topics, it is clear that they want to influence public policy rather than be isolated in ivory towers. A positive study of accounting research would seek to understand why some departments or fields tend to be associated with one research methodology or another, etc, rather than simply recommend that everyone do one thing (see Coase for more details and examples of Friedman’s theory failing the facts). Coase’s paper is found in his 1994 collection of papers, “Essays on Economics and Economists.” I strongly recommend the book–see also his essay, “Economists and Public Policy” in the same book for a defense of normative research.

To turn to the stimulus for Rob’s post, KRS can retitle their paper as “What Will GAAP Look Like” if they want to appear to everyone else to be “positive researchers.” They can “positively” predict that their efficient economic outcome will be achieved in the absence of political interference (parallel to gravity pulls everything down at the same rate in a vacuum). They could then “positively” examine prevailing political forces and predict which “efficient” outcomes will not materialize assuming these forces are unchanged (in presence of air, feathers fall slower than cannon balls). I don’t think this changes much of the substance of their analysis, but it does frame things a bit differently.
[I use "politics" as a catch-all for anything that would change the predicted outcome if sufficiently powerful; could include sociology, anthropology, quantum physics or anything else, just a label here]

That has always been my impression as well, stemming from Friedman’s 1953 essay on positive economics:

“. . . it means that a consensus on “correct” economic policy depends much less on the progress of normative economics proper than on the progress of a positive economics yielding conclusions that are, and deserve to be, widely accepted. It means also that a major reason for distinguishing positive economics sharply from normative economics is precisely the contribution that can thereby be made to agreement about policy.”