Why Be an Economics Major?

The Economics Major and You
  • Preparation for a wide range of careers
  • Higher incomes than most majors
  • Excellent job growth

What is the economics major?
Economics majors are trained to understand how individual markets work and to understand how government policy influences the economy. The major does not provide a single set of skills. Instead the major provides a number of important business skills of which analytical reasoning and data analysis are probably the two most important. Since these skills are important in most businesses, you should view economics as a broad based major which prepares you for a variety of careers.

What do economists do and where do they work?
Economics majors successfully compete with most majors in most areas of business. For example, it is not unusual to find people with economics degrees working in marketing departments, corporate planning, finance departments, or any other management job. In fact, at most universities without a business school, students interested in business major in economics. One survey found that the primary job responsibilities of business economists were forecasting the United States economy, analyzing and forecasting specific industries, analyzing international issues, market research, and client support.

The National Association of Business Economics (NABE) conducted a survey of economists in 2002 and found that 18.5 percent of economists work for the government, 16 percent work for consulting firms, 11.5 percent work in academia, 11.2 percent work in financial institutions, and the remaining 42.8 percent of economists were working in other areas.

How much do economists make?
The NABE survey found that the average starting salary (ignoring bonuses) for economists with a bachelor’s, master’s, and Ph.D. degrees are $38,000, $48,000, and $70,000. This compares to an average income of $36,000 in 2002 for the United States.

Economics majors also do very well when compared to other majors. Table 1 shows data from 1993 (the most recent data available) comparing incomes of economics majors with incomes from other majors. (In the United States, average income in 1993 was $25,500.) The median income for economics majors was among the highest for both men and women. Just as important as the median income is the upside potential for economics majors. The 80th percentile of earnings for female economics majors was $63,312 and for male economics majors was $81,777. Both of these numbers were higher than any other major.

Research also shows that economics majors earn as much or more than other business majors. Economics majors earned 11 percent more than business administration majors and 7 percent more than marketing majors. The benefit of the economics major increases with the more education you get. If one looks just at those students who went on to earn a masters degree then economic majors earned 19 percent more than accounting majors, 20 percent more than business administration majors, 15 percent more than finance majors, and 18 percent more than marketing majors.

What are the future job prospects?
Not only do the earnings of economics majors compare favorably with the earnings of other majors, but economics majors also have excellent job prospects. The Bureau of Labor Statistics indicates that the number of jobs for economists will increase between 21 percent and 35 percent from 2000 to 2010. This increase is faster than average. Job opportunities for economists will be best in research, testing, and consulting firms, but job growth will be slow in the government sector.

What about graduate school?
The economics major is also excellent preparation for law school. Research shows that economics majors scored the highest on the LSAT during the 1990s. Table 2 shows the LSAT scores of economics majors compared to other majors. Additional research shows that each 1 point on the LSAT translates into an additional $2,600 in salary for the first year out of law school and that the benefit of the higher LSAT score grows over time.

Representative sample of recent Quinnipiac graduates

Law School: University of Connecticut, Florida State University, Vanderbilt University

Graduate School: Boston University, Columbia University

Business: Alliance Capital, Axiom Consulting Group, David Lerner and Associates, Federal Reserve Board (D.C.), GE Capital, Liberty Mutual, Oppenheimer Funds

Sources
Berkowtiz, Ruth. “One Point on the LSAT: How Much is it Worth?” American Economist, Fall 1998, 80-89.
Black, Dan; Sanders, Seth; Taylor, Mike Lowell. “The Economic Reward to Studying Economics,” Syracuse University Working Paper #2002-020, 2002.
Bureau of Labor Statistics, Occupational Outlook Handbook, accessed on the web at
http://www.bls.gov/oco/content/ocos055.stm
Hecker, Daniel. “Earnings and Major Field of Study of College Graduates,” Occupational Outlook Quarterly, Summer 1996, 11-21.
Mabry, Tristan. “Economics Enjoys a Bull Run at Colleges,” Wall Street Journal, November 30, 1998, A1.
Nieswiadomy, Michael. “LSAT Scores of Economics Majors,” Journal of Economic Education, Fall 1998, 377-379.

TABLE 1 - 1993 Earnings Distribution of College Graduates with Bachelor’s Degree Only
Women
Men
Major
1st Quintile
Median
4th Quintile
1st Quintile
Median
4th Quintile
All Major Fields
$22,339
$31,848
$45,397
$29,373
$43,856
$65,193
Accounting
26,427
37,702
51,411
33,446
49,632
76,229
Agriculture
18,821
28,178
43,469
25,410
37,292
53,185
Architecture and Environmental Design
25,359
35,718
51,953
29,650
42,657
60,675
Audiology and Speech Pathology
21,638
29,494
41,720
---
---
---
Biological and Life Sciences
23,861
33,107
45,943
28,378
40,675
60,049
Business, except Accounting
23,258
33,373
48,677
29,717
44,672
70,085
Chemistry
24,459
35,803
50678
32,643
49,615
71,644
Communications
22,182
31,699
48,736
26,003
38,131
61,492
Computer and Information Sciences
30,035
41,559
53,786
35,068
47,303
61,434
Criminal Justice and Protective Service
23,163
30,146
40,563
28,359
38,818
51,602
Economics
25,882
39,684
63,312
30,578
50,360
81,777
Education, including Physical Education
20,387
28,696
38,799
25,508
35,216
50,310
Engineering
32,683
46,389
59,717
38,726
52,998
71,470
Engineering Related Technologies
27,901
39,494
52,185
32,085
45,286
61,399
English Language and Literature
21,426
30,483
44,432
26,398
39,385
63,342
Foreign Language and Linguistics
22,453
32,112
44,638
23,141
32,346
52,943
Geology
30,050
36,790
51,297
31,682
41,925
61,512
Health and Medical Technologies
29,594
35,321
44,644
29,777
36,086
47,908
History
20,034
30,144
43,047
26,159
39,052
58,789
Home Economics
18,863
27,496
40,358
---
---
---
Liberal Arts and General Studies
24,723
33,383
47,207
26,012
39,249
71,423
Mathematics
23,719
36,256
56,115
33,877
52,316
76,129
Nursing
30,891
40,096
49,194
34,142
44,022
56,653
Pharmacy
36,493
47,567
56,342
42,377
50,805
62,077
Physical Therapy and Related Services
32,114
40,491
52,882
38,700
49,730
57,009
Physics
---
---
---
35,084
51,819
78,750
Political Science and Government
22,690
31,538
51,404
27,310
43,311
69,625
Psychology
22,731
31,393
44,525
27,914
41,986
60,447
Social Work
19,885
27,619
36,454
32,200
31,507
47,843
Sociology
21,062
30,115
42,307
27,495
39,574
60,624
Theology, Philosophy, and Religion
18,086
28,375
42,057
19,335
29,966
45,934
Visual and Performing Arts
19,667
29,250
42,054
22,517
33,571
52,373
Other Fields
22,419
32,176
45,987
26,594
38,408
57,240

Source: Daniel Hecker “Earnings and Major Field of Study of College Graduates,” Occupational Outlook Quarterly, Summer 1996, p.19.

TABLE 2 - LSAT Scores for 14 Majors with More than 2,000 Students Taking the Exam

Rank 1994-95
Major
Average Score
# Students
Rank1991-92
Average Scorer
# Students
1
Economics
155.3
2,916
1
155.7
4,157
2
History
154.0
5,819
3
154.4
5,080
3
English
153.7
6,324
4
153.9
5,698
4
Engineering
152.7
2,656
2
154.7
2,536
5
Journalism/Foreign Language
152.5
2,002
7
152.3
2,042
6
Finance
152.2
2,009
5
153.1
2,756
7
Psychology
151.9
3,977
8
152.0
3,522
8
Accounting
151.8
2,340
6
152.6
2,855
9
Political Science
151.6
15,388
9
151.8
13,628
10
Communication/Arts
150.7
3,898
10
150.8
3,909
11
Management
149.4
2,735
11
149.9
3,294
12
Sociology/Social Work
149.3
3,129
13
149.2
2,550
13
Business Administration
148.6
2,111
12
149.6
2,454
14
Criminology
145.8
3,960
14
145.9
2,928
Source: Michael Nieswiadomy “LSAT Scores of Economics Majors,” Journal of Economic Education, Fall 1998, p.378

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