Does anyone know why a major in economics pays well? I did consider majoring in it because 1) I thought it was interesting, and 2) I heard that many economics graduates can work in several industries including business, finance, government, and law, etc, but I did not expect it to pay extremely well. Yet when I go on the web and look at multiple websites, including Payscale, studentsreview, slate, or look at Georgetown’s “The Economic Value of College Majors” all of them point to economics majors earning high salaries. Now based on what I’ve seen, many people debate about payscale which is understandable as it is based on salary surveying. I’m sure people debate about studentsreview also. But they do provide some data at least. The main point I’m asking: A lot of sources out there say in general economics is a good major from a salary standpoint, but does anyone know what economics majors do out in the workforce that earns them a very good paycheck? And I’m not mentioning about graduate degrees. I’m only mentioning about undergraduates. As it is, undergraduates usually do not become economists as those positions typically require a masters degree at least. Which means that those who do major in economics at bachelor’s degree level will most likely not even do economics work at all. So what is it about the economics major? What do economics students do?
It’s probably one of the most demanding majors outside of STEM. Economics majors have to be comfortable with higher math (including calculus, linear algebra and differential equations), statistics, regression analysis, probability theory, as well as be good at modeling theoretical constructs and solving them. This preparation sets you up well for a lot of great high-paying jobs in mgmt. consulting, banking or other service professions, Fortune 500 positions, gov’t analyst positions, and international positions. You are paid commensurate with the demand for your skill set.
I know economics majors who did well after college and others who floundered and could not find a good job after graduation. How much you might earn after college is depending on many factors. Your major is just one of them. Other factors that need to be considered include (but are not limited to): what school you are at, what companies recruit at your college, how well you do in college, what types of internships etc. you get while in college, your level of involvement in meaningful activities in college, and how well you interview to name but a few.
Before you decide on economics as a major you should take a couple of classes in the subject, see how you do, and if the subject is of interest to you.
Economics is a very good major. It makes students think in a very logical way. If you like economics, you should major in it.
The average salary that you observe from US census, however, requires a little bit of further reading. Note that in general there are about 10-20% of students in very top-tier universities (e.g., Ivy Leagues) majoring in economics because that is pretty much the only thing that liberal arts colleges have relating to business. These students, as you can imagine, tend to earn good money. In contrast, there are only about 2-4% of students choose to major in economics in those universities that have an undergraduate business unit. The students from these universities on average earn less. This asymmetry structure thus inflates the average salary for the entire population of economic majors relative to other majors that have a more symmetric structure.
In general, economic majors from very top universities have all access to finance, consulting, and government jobs. In contrast, economic majors from weaker universities tend to sent their students to local governments and their agencies.
Interesting stuff that you all have mentioned.
Prof2dad, that definitely makes a lot more sense regarding the salaries of economics students. I have considered majoring in economics because I do like the subject and like you said, and even I noticed this after taking an upper level economics course, it makes students think logically. I think that is a great mindset. But as of now I am a civil engineering major. I’ll see how I do in civil engineering and if I don’t do as well and look to make a change it probably will be either economics, geography (GIS concentration), or meteorology. I’ve thought about finance as another back up option but that would add three years or so to my graduation which would be the longest of the majors I mentioned. To be honest I’m not so sure I would want to do that. I figured if I wanted a Finance major maybe I can do an MBA at some point after getting some work experience in. One question I do have to ask though: I’m not from a very top-rated university, but I do attend at a pretty good and known university. Not sure if that will make a big difference from the lower tier universities or not, but my question is about the jobs. Do economics majors from good, but not superb, universities have good job prospects in general?
The job prospects question is also probably a good one for Mamelot to answer also.
Happy1, one of the biggest obstacles keeping me from being involved in school activities is that I do work a part time job in sales. Not sure if that will hurt me in the long run should I make the switch to economics, but I do think that my work experience in sales could help me knowing that I have learned how to sell. So maybe I can sell myself in an interview, but with that being said I never expect any interview to be easy.
Do economics majors with only a undergraduate degree get paid well??
If your school is known for having a good graduate economics program then that will probably filter to the undergraduate which will help. Taking some business classes as electives will help as well. The main thing is how many corporations recruit on campus because that’s your easiest route to a job. If you are at a well-known place with a decent reputation, there are probably a lot of alums who recruit from the area and outside the area. Check that out with your placement office. The economics department might also assist there, although if you are at a research institution then they are going to be more focused on placement for the PhD students. Still, if there are undergraduate research opportunities available w/in the economics department, that might well lead to a job or at the very least a good item on your resume that gets noticed.
Civil engineering is also very rigorous so as long as you are holding your own in that field you might consider staying there. Lots of engineers go on to get MBA’s or other graduate degrees in order to advance their careers to the executive level so that’s always an option down the road.
Most of all, know that the resources are there at your college to help you find gainful employment; however, the responsibility to land a job is going to rest with the student. I graduated with an MBA from a tippy-top B-School many moons ago but we still had to hustle to find employment. There were kids who didn’t get summer associate positions between years 1 and 2 and who didn’t have a job upon graduation. It happens even at the best places. However, if you take advantage of the resources at your college, you will maximize your chances. Work with the placement office to polish up those interviewing skills and produce a killer resume. Read a book or two on how to land a job in your field of interest. It’s amazing how that type of effort pays off and you will be well-ahead of the pack if you do these things.
@PrimeMeridian at #5 - I think they do and that’s easily seen by the increasing popularity of the major. We also know kids who have opted for economics because they know that it’s considered to be a “real” major (they got jobs, too). However, unlike engineering (ABET-accredited programs will have very similar curriculum and rigor), the quality of your BA will depend on the school. (That’s also true for undergraduate business programs). There are certainly some pretty crappy economics departments out there. The flagship for the state I grew up in, for instance, had major problems with its economics faculty awhile ago that never properly resolved and that certainly has to impact the quality of the degree there. In general, the quality of the major will be correlated with quality of the school AND quality of the economics faculty. OP can look all this up online to determine if the major at his/her institution has a decent reputation for economics.
Since OP is already in a STEM category, he/she might also consider the Economics BS degree (rather than BA) if such is offered. That would be more math-y and quantitative. Economics may have different tracks and degree options depending on the university. Our state flagship offers three tracks: BA, BA (quantitative emphasis), and BS. All within the liberal arts college (or college of arts and sciences as it’s called at some institutions). The BS is the most rigorous but it’s not going to be more intense than engineering. You don’t need the BS to get a job as I understand that the BA or BA/Quant. are also good choices. A lot depends on how math-y you want to get.
As mentioned before, Econ majors from ivys and top LACs that come from target schools go on to jobs in finance in New York with very high starting salaries
“Do economics majors from good, but not superb, universities have good job prospects in general?”
Based on my observations, the answer is, in general, yes. But your success will be also strongly determined by how much you network and the strength of your university’s school tie.
“Do economics majors with only a undergraduate degree get paid well??”
At very top-tier universities (say HYP, etc.), undergraduate economic majors and the finance majors at Wharton tend to land a job on Wall Street or related jobs. Their salary and expected bonus for right out of gate is mostly around $80K to $130K. In lower-tier universities, the pay is often less than half of the numbers that I listed above. Also note that about 1/2 to 2/3 (depending on whether that is a good year) of economics majors at very top-tier universities have at least one job offer at the beginning of their senior year. I have a professor colleague who used to teach at Yale. This colleague told me that some economics students there were troubled by the difficult choice of selecting one out of several good offers. And of course this buyer’s market is not going to happen at lower-tier universities.
The more math-intense track of economics, say a BS degree or a major called something like “Economics and Mathematics,” is often designed to help students to get into a graduate program: it can be a master degree in economics, a master degree in finance, an MBA degree (mostly after a few years of working experience), or directly into a PhD program in economics, finance, or something else. I sometimes see students from weaker undergraduate economics background into a stronger economics master program and then landed a job at the federal government and its agencies.
I would agree with @prof2dad with the added qualifier that it’s possible to get an excellent economics education at a lesser-renowned regional school or small LAC. A lot depends on what they are teaching. If they are stuck on concepts that Nobel laureates put to bed 30 years ago then, yeah, that’s a weak program regardless of where it’s located. Also, if your program has a good amount of Math it’s probably a more rigorous program and will attract bright students. Not sure you need to double major in Math at that point. But . . it won’t hurt. And nowadays it’s important to make the most of your college time and plan wisely - employers like to see evidence of that. We just came from a Carlson (B-school) preview at the U of MN and even the busy business majors are minoring in one or two other subjects or even double majoring!
I believe that an undergrad degree in economics, from an elite school, combined with math or a minor in math can lead to a very high paying job, assuming the person has top grades. I know of a young student who a few years ago graduated with an economic and math degree from UC Berkeley. He received a job offer and still works for Goldman Sachs. He told me he was going to apply to medical school. Subsequently, he was admitted to medical school. He declined it and decided to stay at Goldman because the money was too good, plus Goldman paid the costs for him to attend part time to get an MBA from a top 15 graduate business school.
Even with top grades, I don’t think this would have happened if the person graduated from a lower tier school. There may be exceptions such as legacy, connections, etc. Goldman Sachs likes to hire the smartest and brightest students. Graduating from an elite university like UCB with high honors and top grades in a difficult major is a good indication that the students top notch.
@UCBUSCalum is that student working in NYC or SF?
The top schools don’t have business majors, as mentioned above. Econ is the closest one - so Wall Street scoops them up at high salaries. That is probably a big driver of the higher pay.
A qualifier: the major of “Economics and Mathematics” is just one major, not double majors.
This probably has already been said but Wall St. and Mgt. Consulting tend to pay the most.
Do the I-Banks and Commercial banks still have those two year financial analyst programs? Back in my day (so 1980’s) smart kids with good grades could apply for a two-three year program out of undergrad. and work in the financial sector for a bit before turning to law or B-school. You were not expected to stay long-term. And, incidentally, you didn’t have to be a business or economics major to be accepted. They gave you a “boot camp” experience and I think it was possible to flunk out before they put you in the field. Those were the days #:-S
@suzyQ7 Wharton at UPenn? Haas at UC Berkeley? Dyson at Cornell? Mendoza at Notre Dame? to name just a few.
Perhaps it would be better stated to say “many top schools don’t have business majors” as there are notable exceptions
^^Yes, that’s what I should have said. I’m not sure why it is that way - something about that they don’t want “job training” at these schools…but yet many do offer engineering and computer science majors - so don’t get why Finance or accounting are not prestigious enough.
@Mamelot: The person works in a major financial center city. This person either double majored in econ and math or majored in econ and minored in math. The point is that the smartest undergraduate students from an elite university will get hired by investment banking firms like Goldman Sachs, JP Morgan, Blackrock, etc. Also, about 10 years ago, I mentored a female from UCB Haas who was also a top student. She worked for Lehman Bros. and later got burned out after working many 14 hour days, 7 days a week for a little over a year. Years ago, these jobs would have gone to graduates out of Ivy league MBA’s or elite school MBA’s (top 10 to 15 MBA programs).
@suzyQ7; @happy1 : other elite schools that have undergraduate business schools: MIT; Michigan… Also, some business schools have existed for a long time. Per Wikipedia, UPenn’s Wharton School, established in 1881, was the first business school in the US. UC Berkeley’s business school, established in 1898, was the first public business school, known at that time as the college of commerce.
@UCBUSCalum as someone who once worked the 14 hour days (actually, 16) seven days a week in the bulge bracket, I sympathize with your protégées! “Back in my day” there just were NOT a lot of top MBA tracks outside the traditional “full-time” program. Things have changed now. 25-30 year ago it wasn’t at all unusual to find an analyst working on LaSalle Street in Chicago who was a “part-timer” because Booth and Kellogg had originated those programs and they were very popular options for many employers in the Chicago area. In contrast, Wall St. was predomininately populated at the analyst level by kids from top schools (mostly in the East but also Midwest ) who were expected to stay a few years then move on to full-time grad school. We knew one excellent guy who apparently didn’t get the memo, complained about the lack of promotion, and was gently advised to quit (he was way too good to fire but they didn’t have a position for him w/o that MBA). I’m sure there were exceptions but the entry-level associate class on Wall Street was largely recruited via the alumnae networks from the top East Coast and Midwest MBA programs. There must have been very few, if any, internal promotions from analyst to associate.
My question about location has to do with more recent trends for the analyst class. If GS/Lehman et al. were hiring their analysts for the SF offices, they’d obviously be drawing from UCB. Piper or the Minneapolis-based F-500’s do the same thing here in the Twin Cities (drawing a large number of top kids from UMN). If GS/Lehman were on the UCB campus in order to hire for their NY offices, different story. If your protégées were able to find these jobs on their own that’s awesome for them but a few UMN students end up on Wall St. as well every year via the same route and I wouldn’t put UMN in the same category as Cal (neither for business nor economics. Or engineering or generally). Smart, motivated kids usually attend decent colleges/unis, major in more rigorous stuff, keep their GPA’s at a respectable level, and end up working the better jobs, whether they find them on their own or are recruited on campus. I do know someone who graduated economics at UCB (mid '90’s or so) and she really struggled to find work but I’m not sure her grades were that stellar plus she didn’t really understand how to go about getting a job. I doubt she hit the career center much at all before the end of senior year. So even at the top schools and in a good economy one can struggle. A LOT depends on the individual.
In general, I’d agree that all else equal, it’s MUCH better to be at Cal than a lower ranked university. the signaling effect of a Cal education is significantly positive (economists have done some fascinating work on this subject).