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Normative economics concerns itself with what ought to be in a society, and so is always grounded in value judgments. Individuals who do not share the value judgments, explicit or implicit, that govern a particular normative approach will not necessarily endorse the policy recommendations of that approach. In this sense, a normative model is evaluated in terms of the realism of its assumptions. Here four separate, though closely related, approaches to normative economics are outlined. Three important, radical departures from mainstream neoclassical economics are ignored, namely: contractarian, classical liberal, and social justice ethics.

The Utilitarian Ethic

Jeremy Bentham (1748–1832) is widely regarded as the first scholar to apply the utilitarian ethic to the normative analysis of economics and the law. Bentham was a disciple of René Descartes ...

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