Why Be an Economics Major?

• 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. The most recent survey (1992) 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% of economists work for the government, 16.0% work for consulting firms, 11.5% work in academia, 11.2% work in financial institutions, and the remaining 42.8% of economists were working in other areas.

Clearly economists provide a range of services across a wide number of sectors.

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% more than business administration majors and 7% 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% more than accounting majors, 20% more than business administration majors, 15% more than finance majors, and 18% 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% and 35% 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.

Law school admission directors agree. In 1998 the Wall Street Journal ran an article on the economics major and quotes Edward Tom, the director of admissions at the University of California-Berkeley law school, as saying “Of all the majors, economics ranks in the top four or five consistently year after year for both applicants and offers made.”

Economics is also excellent preparation for an MBA. The same Wall Street Journal article quotes Richard Silverman, executive director of admissions at Yale School of Management, as saying “The best people are more frequently taking economics as their major than they were a decade ago.” He goes on to say “It shows they have the intellectual fire in the belly to perform well in an MBA program.”

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.

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

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