<p>I am soon going to be undergraduate student, but I'm not sure whether to choose economics or business undergraduate program. I am planning to transfer and go to a graduate school for a MBA degree. Much help is appreciated for any suggestions or help on this issue.</p>
<p>thank you!</p>
<p>The two majors are very different. Economics is more theoretical, and will tell you how the economy works. Business includes things like marketing, accounting, finance, and business administration, which are very pre-professional.</p>
<p>If you plan on diving into an MBA right after undergrad, going into Business might suit you. But, you can hold a solid income for a while with an Econ degree and later get an MBA. As dfree said, Econ is a lot more theoretical while Business focuses on the mechanics of the industry.</p>
<p>Well, something you should know is that getting an undergrad business degree is not necessary at all for getting an MBA, nor is it a requirement to be working in business out of college or during college. You also shouldn’t think that economics is remotely close to business just because they sound related.</p>
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<p>No one gets their MBA right after undergrad, work experience is just about required to get into a good b school. Furthermore, if you get an undergrad degree in business, you might not need to get an MBA at all, which would depend on the path of your career after college.</p>
<p>[Wealth</a> or Waste? Rethinking - WSJ.com](<a href=“Wealth or Waste? Rethinking - WSJ”>Wealth or Waste? Rethinking - WSJ)</p>
<p>Undergrad business degree, is largely BS. Do Ivy League schools (outside of Wharton) offer undergrad business degrees? No. </p>
<p>An undergraduate education is a terrible thing to waste, might as well learn something interesting while your there.</p>
<p>Slight correction, a Baccalaureate in Economics will not teach you how the economy works, it is too short of a time period to teach such an issue. However, it will teach you why certain transactions are made and will teach you a solid quantitative approach to how to deal with certain issues related to Business. I’m told that MBAs after Economics BAs make for solid business executives.</p>
<p>dfree:</p>
<p>Since the importance of an MBA has been diluted to such a degree compared to previous times, school quality and work experience (though needed) aren’t as integral factors as they used to be. Ergo, getting an MBA earlier on isn’t looked down upon/a hassle. +1 on the last sentence, though.</p>
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<p>Well, frankly speaking, most undergrad majors are largely bull. Let’s face it, you don’t have to put in much work nor learn very much to pass most college majors. {You may have to work hard to get a strong grade, but if all you want to do is simply pass, you don’t have to do very much at all. It is for this reason that for many college students, their true ‘major’ is in partying and hooking-up.} </p>
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<p>If I may digress, as we’ve so painfully been made aware, even a PhD in economics and decades of experience in academia does not mean that you know how the economy works. After all, what exactly were all of the economists in academia doing in 2008, right before the world was about to be struck by the greatest financial calamity since the Great Depression? Not only did the vast majority of them provide no indication that a crisis was about to strike, most of them self-congratulated themselves for their supposed ability under the aegis of the ‘Great Moderation’ to steer the economy through the shoals of volatility. Indeed, the small handful of economists who did predict storm clouds such as Roubini were widely derided as doom-mongers (and indeed Roubini himself was ridiculed as “Dr. Doom”). </p>
<p>But such is the sad nature of academia that you can be catastrophically wrong, and nothing happens to you. All of those economists who predicted smooth sailing and mocked those who preached caution, they all still have their jobs. They’re still teaching students. They’re still publishing academic papers. Most perniciously, they’re still serving as referees and editors of academic journals, meaning that they still sit in judgment of others. Such is the power of the tenure system that it doesn’t matter how clearly falsified your ideas may be - you can never be fired.</p>
<p>@sakky: I agree, and I’ve agreed with your points on this in the past, but I believe it was 89 or 90 that Greg Mankiw predicted the eventual collapse of real estate, ala 2008, even without knowing what would happen with Clinton/Reno and the Boston Fed in the 1990s.</p>
<p>I feel that due to a high degree of specialization, the greater issues of the economy may often be lost upon academics.</p>
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<p>I’m afraid that it’s insufficient for simply a tiny minority of economists such as Mankiw, Roubini or Shiller to predict a housing collapse. Such an outcome might well be explained by sheer luck, as after all, with hundreds of tenured economists in the world generating a wide probability distribution of predictions, some of them are bound to be correct simply by the laws of statistics. If you have a room full of people all repeatedly flipping coins, you can’t then simply proclaim that the handful of people who got 5 heads in a row to be prescient. </p>
<p>What matters is whether the economics community at large predicted the housing collapse when it happened. Clearly and sadly they did not.</p>
<p>But far more importantly than predicting the housing collapse - which was widely dismissed in its 2007 initial phase as leading to at worst a garden variety downturn - was the inability of the community to predict the subsequent banking collapse and the concomitant sovereign debt crisis. Even Mankiw, along with the community at large, seemed to miss this far more serious crisis. Even more embarrassingly, economists cannot seem to agree on how to repair the financial and sovereign debt system. </p>
<p>Why is that? Isn’t that what they’re paid to do? Economists tend to be amongst the best paid faculty in academia, and economics is undoubtedly the most politically powerful academic discipline in the world. Ben Bernanke is the second most powerful man in the US and Mario Draghi is the most powerful man in Europe. Why do we in society continue to accord political power to a discipline that produces so few reliable predictions?</p>
<p>That to me is the most pernicious aspect of the problem. Sociologists, historians, political scientists, and humanities scholars may also not be able to produce reliable empirical predictions. But at the same time, nobody is proposing to provide shockingly high salaries and breathtaking political power to them. So why the economists?</p>
<p>I agree with you, but disagree on one material point. The idea that the whole of intellectual communities miss large points while an astute scholar “gets it” is not unique to the field of Economics or Finance. Similar events have occurred in other fields, such as Said.</p>
<p>What’s Said?</p>
<p>Granted, I certainly agree that other communities also have been largely mistaken except for a few outliers. But those other communities, at least with the sci/tech field, then incorporate the ideas of those outliers and then rehabiliate them (perhaps posthumously) as pioneers of their field. Copernicus was initially derided for proposing a heliocentric model of the universe, but he’s now widely credited as being one of the most important astronomers in history, and the geocentric model of the universe has died. The field moved forward.</p>
<p>Economics and finance, in contrast, don’t really move forward. The same old arguments continue to be revived and rehashed over and over again, just using different terminology. For example, in response to the financial crash, many economics have revived the 70/80-year-old works of Keynes and Hayek. When physicists encounter unexplained problems, they don’t revive the old papers of Einstein and Planck. </p>
<p>I’ll put it to you this way. How many theories in macroeconomics/finance can you name that used to be popular but now which the community all agrees has been definitively falsified? It will likely be a very short list - probably a null set. Those believers of a particular school of macroecon will continue to believe in that school no matter what evidence you show them. In contrast, it’s hard to find any respectable physicist who continues to believe in the geocentric model of the universe.</p>
<p>Edward Said. I apologize for not being more clear.</p>
<p>Economics is a social science, there are things it cannot explain and things which it does seek to explain can be viewed from an outside perspective and argued to exist in a different form. Fallacious arguments can exist in perpetuity when there are “soft” factors involved.</p>
<p>Karl Marx’s analysis of the Economy and the analyses of more mainstream Economists are not terribly different when you examine the fact-based analysis of wage/price inflation. Their projections of what would happen beyond that point, as well as some Economists failing to take into account certain “Schumpeterian” aspects of Economy will always limit the scope of their certainty.</p>
<p>My point, mainly, is that I think you’re expecting the field to do more than it can at present form. It is a social science dealing with the application of scarce resources which have alternative uses, not a prescient model of all forms of human behavior. Such a thing would be impossible when taking into account the volume of datum required to make such a prediction. There’s no way Bear Stearns or Bank of America would have disclosed their portfolios to the degree to make the depth of the crisis apparent to academics.</p>
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<p>And academic disciplines mature into true sciences only when they are able to formally define previously ‘soft’ factors in a way that everybody researching in that discipline can agree on what they are and, more importantly, how to measure them (or at least agree that for the time being, it cannot be measured). Only then can a discipline move forward, without the perpetual and unproductive disputes over basic definitions/concepts/measurements that pervade the social ‘sciences’. </p>
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<p>I must disagree with your contention that I am the one who is expecting that economics do more than it can at the present time. Rather, *it is the economics community *, along with society at large, who has set forth this expectation. </p>
<p>To reiterate, economists are generally among the highest paid faculty members at most research universities - far higher than their colleagues not only in the other social sciences, but also in the mathematics and statistics departments whose techniques that economics commonly use. Economists appear regularly on TV news shows, magazines, and newspapers to promulgate their opinions about policy. In contrast, how many sociologists or psychologists are invited by the media to present their ideas? Numerous economists are also hired by the world’s elite consulting and finance firms - and not merely for the brand-name of their university (in the way that a Harvard humanities student can become an investment banker simply by virtue of the Harvard brand rather than his humanities knowledge) - but to do actual economics work. The leading economist Jim O’Neill, who is credited for coining the term BRIC’s, doesn’t even work for academia at all, but rather works for Goldman Sachs. </p>
<p>Lest anybody think that economists are simply overhired and overpaid by private sector actors who are free to spend as they please, I would point out that their employment affects the public fisc as well. Many academic economists are not employed by private universities, but rather by tax-supported public universities. Since Truman, the President of the United States has been advised by the Council of Economic Advisers who are part of the Executive Office of the President and are therefore paid by taxpayer dollars. Other disciplines have no comparable Presidential council dedicated specifically for them that has the ear of the President, ironically, not even political science. {To be sure, the President is obviously advised by plenty of political operators, but few if any of them are poli-sci academics. In contrast, much of the CEA is indeed from economics academia.} Similarly, the IMF, World Bank, EBRD, and most central banks around the world including the US Federal Reserve, ECB and the Bank of England are largely staffed by highly-paid economists. The Federal Reserve pays 6-figures for newly minted entry-level PhD economists, (usually) without need for a poorly paying postdoc. How many other disciplines have comparably high-paying job opportunities for their new PhD graduates paid for by the taxpayer? </p>
<p>But I think far more pernicious of all is not simply how much economists are paid, but rather how much influence they have to affect public policy. Ben Bernanke is widely credited as being the second most powerful man in the US. Mario Draghi is surely the most powerful man in the European Union, and Mervyn King is no worse than the #2 most powerful man in the UK. Like I said, the media periodically invites economists to pronounce upon the core issues of the day, and the Council of Economic Advisers has the ear of the President. </p>
<p>None of this would be any cause for concern…if economics had proven itself to be a mature, rigorous discipline able to point to an impressive list of reliable, non-obvious predictions. Clearly they have not, with the widespread inability to predict the crash being only the most recent egregious example. Nor could they predict the Asian economic crisis before that, nor the S&L crisis, nor the Latin American debt crisis, etc. </p>
<p>And that’s why I say that it is not I who is the person who is demanding that economics do more than it can. Rather, * it is the economists themselves*. It is through their supposedly rigorous understanding of the economy that allows them to clothe themselves in the garb of a science. It is why they are able to demand the high salaries and political influence that they have. The political power that economists have over the world is titanically out of proportion with the reliable knowledge that they provide. In stark contrast, natural scientists and engineers have produced mountains of reliable results…yet have minimal political power. Psychologist Max Bazerman remarked in his 2005 Academy of Management Review paper that: “The key question is not whether economic research has been self- fulfilling but why it has had so much influence,
given its failures, while other social sciences have had so little.” In perhaps the ultimate triumph of academic marketing, economists have famously managed to weasel their way into having their top prize be called a “Nobel Prize” when that prize actually has nothing to do with the original Nobel Foundation set forth by Alfred Nobel. </p>
<p>I also agree that perhaps the root of the problem actually stems with us in society. Obviously if somebody is willing to (stupidly) offer me undeserved money and power, I would surely take it. We all would. The real question then is why do we in society continue to offer economists this kind of power?</p>
<p>Fine points all around. There is a difference between the “art of the possible” as defined by Political Science and fact-based Economic analysis. For example, I’ve seen seminars about the hung number of similarities between Ronald Reagan and Jack Kennedy, as well as their economic policies, but in a Political Science realm that is an argument for disaster.</p>
<p>I disagree that it is Economics driving these issues, but rather Political Sciences masquerading as Economics.</p>
<p>Also, the survey of newly minted Ph.Ds in Economics (From the Walton School at U of Arkansas) determined the average starting salary to be above 100k. I don’t want the bubble to burst before I get mine.</p>
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<p>Even if it isn’t economics that drive these issues, it is certainly numerous individual economists who do so. After all, whether it is Paul Krugman, Joseph Stiglitz, Alan Blinder, Brad DeLong on the political left, or Robert Barro, John Cochrane, John Taylor, Glenn Hubbard, Michael Boskin, or Martin Feldstein on the political right - none of them have exactly been shy about pronouncing their opinions opinions regarding all manners of political issues. As an example, Stiglitz has been one of the world’s trenchant critics of the War in Iraq, whereas Boskin has fervently advocated for greater military spending. None of those stances are obviously connected to economics but are fundamentally political statements. Nor do any of them occupy lowly stations within academia. Each one of them is either a “Nobel-Prize” winning or “Nobel-caliber” economist (bearing in mind that, strictly speaking, the “Nobel Prize” in economics is a sham). Any university that hired all of them would instantly have one of the top-ranked economics departments in the world. </p>
<p>And that’s the problem. Society translates their academic standing within the economics community into credibility to not only pronounce upon but also directly affect political policy in a manner that society provides to no other ‘science’. Despite the impressive predictions provided by physics and engineering, we would never dream of allowing physics or engineering professors - let alone psychology or sociology professors - to make politically unaccountable decisions that stake hundreds of billions of dollars of taxpayer money and affect the livelihoods of millions of people. But we Americans let the Federal Reserve Chair do that, and the Europeans let the head of the ECB do that. </p>
<p>But to reiterate, I also agree that society is also fully complicit by its negligence. If economists have undeserved power, it is only because society chooses to give it to them. I don’t mind that economics has yet to mature into a true science that provides a set of non-obvious reliable predictions. Every academic discipline endured centuries of superstition and voodoo-hood: chemistry with its era of alchemists searching for the Elixir of Life and the Philosopher’s Stone, medical science with bloodletting and the Four Bodily Humors, physics with the Four Elements. But they matured. Economics has somehow managed to swindle society into providing them with the pay and prestige commensurate with a mature science, but without the results. </p>
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<p>To use econ-speak, such an outcome would not be bad for society at all. After all, presumably the talented people who were formerly directed to the economics profession to take advantage of the excessively high salaries (a.k.a. “rent-seeking opportunity”) would instead be efficiently allocated to other sectors of the economy.</p>
<p>Point 1 (the Economists doing it themselves): yes, you are correct.</p>
<p>Reply to point 1: there is a reason to have a political aspect to policy economics, because there are things that are Economically sound and feasible that would and could never get passed without the political will to make it happen. But, many of those people have gone too far. One of them in particular (that I happen to agree with politically) often distorts facts and statistics to support his position, but I disagree with his tactics. I don’t think games should be played with people, ESPECIALLY when you have that much power.</p>
<p>Point 2 (presumably talented people directed to Economics): they’re also directed to finance and Business Ph.Ds. I even started going into this forum incase I decided to have a Ph.D in Business, or because some schools have Econ in the business department. But Ph.Ds in Accounting pay the most, followed by Finance, followed by Economics.</p>
<p>I wonder what the lowest paid legitimate Ph.D is.</p>
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<p>And let me stop you right there, for can we be sure that the proposals in question are indeed economically sound? Are they merely proofs derived as a consequence of mathematical axioms, as in the case of comparative advantage (the basis of free trade). If so, then such logic is clearly insufficient. One cannot learn about the world through pure mathematical logic alone. If we could, then why the need for billions of dollars of research devoted to scientific labs and experiments at all? Why not save all that funding by merely having physicists, chemists, and biologists discover scientific truths of the world simply through deriving mathematical equations by pencil and paper? </p>
<p>Or are those economic proposals supported by empirical evidence? If so, how strong and reliable is that evidence? How many economists be willing to be so bold as to take that evidence to make a testable non-obvious prediction of the future state of the world, and if that prediction fails, be willing to resign their academic tenure? My guess would be ‘zero’. </p>
<p>That, in a nutshell, is the problem. I would have no problem with the political power & high salaries that economists have managed to amass, if they indeed had attained an impressive state of knowledge of the world evidenced by the production of a collection of non-obvious predictions that were so reliable that they would be willing to stake their careers on them. They would then be entirely deserving of their stature. But they can’t.</p>
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<p>I didn’t intend to turn this discussion into a ranking of the pay scales amongst various PhD’s. I was simply pointing out that, according to economic theory, economists should not be concerned if they were to lose their high salaries, as the human capital flowing to the economics profession would then simply be reallocated to other fields. </p>
<p>But that’s of course true only if economists truly believed their own theory. In reality, I would suspect that most economists would be most agitated if we were to propose that salaries of economists should be slashed. By the same argument, I’ve found it to be deeply self-serving and unseemly for economists to tout the supposed societal welfare benefits of the outsourcing/off-shoring of manufacturing/technology jobs as a consequence of free trade due to lowered labor costs and flexible labor - all the while sheltering under the job security of academic tenure. If “labor flexibility” indeed improves the welfare of society, fine, then let’s implement labor flexibility across all fields, including to the economists themselves. Otherwise, it seems to me that economists are willing to prescribe policies to others that they are not willing to apply to themselves. </p>
<p>But to your point, I think the more important distinction is not really between PhD disciplines but rather amongst PhD departments. A faculty member of an accounting department will be paid extremely well, regardless of what their PhD is in. Nor do you need a PhD in accounting to become an accounting faculty member, as those departments hire plenty of economics and finance PhD’s, and in principle could hire, say, PhD’s in statistics. [Ilan</a> Guttman](<a href=“https://gsbapps.stanford.edu/facultyprofiles/biomain.asp?id=07524649]Ilan”>https://gsbapps.stanford.edu/facultyprofiles/biomain.asp?id=07524649) is an economist by training. Similarly, finance and especially (general) business departments hire plenty of people with pure social science PhD’s. [Gautam</a> Mukunda’s](<a href=“http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=552003]Gautam”>http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=552003) PhD is in political science, for heaven’s sake. </p>
<p>What matters far more than your PhD discipline is whether you are producing research that is of interest to the target department. If you are publishing - or could conceivably publish - in Journal of Accounting Research, The Accounting Review, or the Journal of Accounting & Economics, then you could reasonably target an accounting department. </p>
<p>Now whether those journals actually provide a value-add to society is an entirely different matter. Sadly, much (almost certainly most) business academic research is an epiphenomenon - a game played merely for the sake of credentialing and career advancement rather than actually adding to the stock of knowledge to the world. </p>
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<p>You mean at a business school or across all disciplines (including arts and humanities)?</p>
<p>Across all disciplines. I, of course, don’t mean lowest paid terminal degree, ala MFA.</p>