Although the judgments made in public finance are financial in nature, they should not be perceived as purely technical decisions that attempt to maximize efficiency. Administrative discretion in public finance involves issues of efficiency, effectiveness, values, and ethics. In addition to these issues, administrative discretion requires one to consider both positivist and normative economic theories. The role of government in the economy is split into two decisively distinct camps. Those camps can be defined as normative and positive economic theorists.
Positive theory attempts to make empirical observations into economic self-interest.
Positive theory attempts to utilize methods of analysis such as public choice or cost benefit ratios to arrive at empirical theories or conclusions. This approach to economics is one that is scientific. Because it is scientific, this approach to economics utilizes hypothesis testing to analyze results, conditions, and actions. Social criterion is used to define underlying values that are utilized to define which actions are desirable. Economics in this sense entail not merely the maximum efficiency of the market, but rather incorporate normative judgments.