Downs uses the term “positive theory” to distinguish his Economic Theory of Democracy from a “descriptive” theory— one which would provide a detailed account of the world as it is—from a “normative” theory, one which would offer a vision of how the world ought to work. A positive theory presents testable hypotheses about how the world works, which Downs offers in his final chapter. It is different from a descriptive theory in that it does not purport to describe a specific reality, only general propositions which are subject to exceptions. Unlike a normative theory, its principles are meant to illustrate something fundamental about how things are, rather than how they should be.

Downs uses this phrase to describe the overall benefits that a citizen receives from the government. It is a broad term that may describe both economic and non-economic benefits. Economic benefits would include anything from welfare benefits with cash value, government subsidies for goods such as healthcare or education, or public services funded at least in part through taxation. Non-economic benefits would include the confirmation of personal ideology, a sense of community, or a sense of safety and stability. It may also include policies that a citizen prefers even if it has no personal impact on them whatsoever, such as a diplomatic achievement which the citizen thinks will be good for the world.