The Economics Major
If you are like many college students, you may complain that there is just not enough information available to students about the various majors at a college or university. For example, students who major in business sometimes say they are not quite certain what a business major is all about, but then they go on to add that majoring in business is a safe bet. “After all,” they comment, “you are pretty sure of getting a job if you have a business degree. That’s not always the case with other degrees.”
Many college students choose their majors based on their high school courses. History majors sometimes say that they decided to major in history because they “liked history in high school.” Similarly, chemistry, biology, and math majors say they chose chemistry, biology, or math as a college major because they liked studying chemistry, biology, or math in high school. In addition, if a student had a hard time with chemistry in high school and found it boring, then he doesn’t usually want to major in chemistry in college. If a student found both math and economics easy and interesting in high school, then she is likely to major in math or economics.
Students also often look to the dollars at the end of the college degree. A student may enjoy history and want to learn more history in college but tell herself that she will earn a higher starting salary after graduation if she majors in computer science or engineering.
Thus, when choosing a major, students often consider (1) how much they enjoy studying a particular subject, (2) what they would like to see themselves doing in the future, and (3) income prospects.
Different people may weight these three factors differently. But no matter what weights you put on each of the factors, it is always better to have more information than less information, ceteris paribus. (We note “ceteris paribus” because it is not necessarily better having more information than less information if you have to pay more for the additional information than the additional information is worth. Who wants to pay $10 for a piece of information that only provides $1 in benefits?)
We believe this short essay is a fairly low-cost way of providing you with more information about an economics major than you currently have. We start by dispelling some of the misinformation you might possess about an economics major. Stated bluntly, some things that people think about an economics major and about a career in economics are just not true. For example, some people think that economics majors almost never study social relationships; instead, they only study such things as inflation, interest rates, and unemployment. Not true. Economics majors study some of the same things that sociologists, historians, psychologists, and political scientists study. We also provide you with some information about the major that you may not have.
Next, we tell you the specifics of the economics major—what courses you study if you are an economics major, how many courses you are likely to have to take, and more.
Finally, we tell you something about a career in economics. Okay, so you have opted to become an economics major. But the day will come when you have your degree in hand. What’s next? What is your starting salary likely to be? What will you be doing? Are you going to be happy doing what economists do? (If you never thought economics was about happiness, you already have some misinformation about economics. Contrary to what most laypeople think, economics is not just about money. It is about happiness too.)
Five Myths About Economics about the Economics Major
Myth 1: Economics is all mathematics and statistics. Some students choose not to major in economics because they think economics is all mathematics and statistics. Math and statistics are used in economics, but at the undergraduate degree level, the math and statistics are certainly not overwhelming. Economics majors are usually required to take one statistics course and one math course (usually an introductory calculus course). Even students who say, “Math isn’t my subject” are sometimes happy with the amount of math they need in economics. Fact is, at the undergraduate level at many colleges and universities, economics is not a very math-intensive course of study. There are many diagrams in economics, but there is not a large amount of math.
A proviso: The amount of math in the economics curriculum varies across colleges and universities. Some economics departments do not require their students to learn much math or statistics, but others do. Speaking for the majority of departments, we still hold to our original point that there isn’t really that much math or statistics in economics at the undergraduate level. The graduate level is a different story.
Myth 2: Economics is only about inflation, interest rates, unemployment and other such things. If you study economics at college and then go on to become a practicing economist, no doubt people will ask you certain questions when they learn your chosen profession. Here are some of the questions they ask:
• Do you think the economy is going to pick up?
• Do you think the economy is going to slow down?
• What stocks would you recommend?
• Do you think interest rates are going to fall?
• Do you think interest rates are going to rise?
• What do you think about buying bonds right now? Is it a good idea?
People ask these kinds of questions because most people believe that economists only study stocks, bonds, interest rates, inflation, unemployment, and so on. Well, economists do study these things. But these topics are only a tiny part of what economists study. It is not hard to find many economists today, both inside and outside academia, who spend most of their time studying anything but inflation, unemployment, stocks, bonds, and so on.
As we hinted at earlier, much of what economists study may surprise you. There are economists who use their economic tools and methods to study crime, marriage, divorce, sex, obesity, addiction, sports, voting behavior, bureaucracies, presidential elections, and much more. In short, today’s economics is not your grandfather’s economics. Many more topics are studied today in economics than were studied in your grandfather’s time.
Myth 3: People become economists only if they want to “make money.” Awhile back we asked a few well-respected and well-known economists what got them interested in economics. Here is what some of them had to say:1
Gary Becker, the 1992 winner of the Nobel Prize in Economics, said: “I got interested [in economics] when I was an undergraduate in college. I came into college with a strong interest in mathematics, and at the same time with a strong commitment to do something to help society. I learned in the first economics course I took that economics could deal rigorously, à la mathematics, with social problems. That stimulated me because in economics I saw that I could combine both the mathematics and my desire to do something to help society.”
Vernon Smith, the 2002 winner of the Nobel Prize in Economics, said: “My father’s influence started me in science and engineering at Cal Tech, but my mother, who was active in socialist politics, probably accounts for the great interest I found in economics when I took my first introductory course.”
Alice Rivlin, an economist and former member of the Federal Reserve Board, said: “My interest in economics grew out of concern for improving public policy, both domestic and international. I was a teenager in the tremendously idealistic period after World War II when it seemed terribly important to get nations working together to solve the world’s problems peacefully.”
Allan Meltzer said: “Economics is a social science. At its best it is concerned with ways (1) to improve well being by allowing individuals the freedom to achieve their personal aims or goals and (2) to harmonize their individual interests. I find working on such issues challenging, and progress is personally rewarding.”
Robert Solow, the 1987 winner of the Nobel Prize in Economics, said: “I grew up in the 1930s and it was very hard not to be interested in economics. If you were a high school student in the 1930s, you were conscious of the fact that our economy was in deep trouble and no one knew what to do about it.”
Charles Plosser said: “I was an engineer as an undergraduate with little knowledge of economics. I went to the University of Chicago Graduate School of Business to get an MBA and there became fascinated with economics. I was impressed with the seriousness with which economics was viewed as a way of organizing one’s thoughts about the world to address interesting questions and problems.”
Walter Williams said: “I was a major in sociology in 1963 and I concluded that it was not very rigorous. Over the summer I was reading a book by W.E.B. DuBois, Black Reconstruction, and somewhere in the book it said something along the lines that blacks could not melt into the mainstream of American society until they understood economics, and that was something that got me interested in economics.”
Murray Weidenbaum said: “A specific professor got me interested in economics. He was very prescient: He correctly noted that while lawyers dominated the policy-making process up until then (the 1940s), in the future economics would be an important tool for developing public policy. And he was right.”
Irma Adelman said: “I hesitate to say because it sounds arrogant. My reason [for getting into economics] was that I wanted to benefit humanity. And my perception at the time was that economic problems were the most important problems that humanity has to face. That is what got me into economics and into economic development.”
Lester Thurow said: “[I got interested in economics because of] the belief, some would see it as naïve belief, that economics was a profession where it would be possible to help make the world better.”
Myth 4: Economics wasn’t very interesting in high school, so it’s not going to be very interesting in college. A typical high school economics course emphasizes consumer economics and spends much time discussing this topic. Students learn about credit cards, mortgage loans, budgets, buying insurance, renting an apartment, and other such things. These are important topics because not knowing the “ins and outs” of such things can make your life much harder. Still, many students come away from a high school economics course thinking that economics is always and everywhere about consumer topics.
However, a high school economics course and a college economics course are usually as different as day and night. Simply leaf through this book and look at the variety of topics covered compared to the topics you might have covered in your high school economics course. Go on to look at texts used in other economics courses—courses that range from law and economics to history of economic thought to international economics to sports economics—and you will see what we mean.
Myth 5: Economics is a lot like business, but business is more marketable. Although business and economics have some common topics, much that one learns in economics is not taught in business and much that one learns in business is not taught in economics. The area of intersection between business and economics is not large.
Still, many people think otherwise. And so thinking that business and economics are “pretty much the same thing,” they often choose to major in the subject they believe has greater marketability—which they believe is business.
Well, consider the following:
1. A few years ago BusinessWeek magazine asked the chief executive officers (CEOs) of major companies what they thought was the best undergraduate degree. Their first choice was engineering. Their second choice was economics. Economics scored higher than business administration.
2. The National Association of Colleges and Employers undertook a survey in the summer of 2001 in which they identified the starting salary offers in different disciplines. The starting salary in economics/finance was $40,776. The starting salary in business administration was 7.7 percent lower at $37,844.
What Awaits You as an Economics Major?
If you become an economics major, what courses will you take? What are you going to study?
At the lower-division level, economics majors must take both the principles of macroeconomics course and the principles of microeconomics course. They usually also take a statistics course and a math course (usually calculus).
At the upper-division level, they must take intermediate microeconomics and intermediate macroeconomics, along with a certain number of electives. Some of the elective courses include: (1) money and banking, (2) law and economics, (3) history of economic thought, (4) public finance, (5) labor economics, (6) international economics, (7) antitrust and regulation, (8) health economics, (9) economics of development, (10) urban and regional economics, (11) econometrics, (12) mathematical economics, (13) environmental economics, (14) public choice, (15) global managerial economics, (16) economic approach to politics and sociology, (17) sports economics, and many more courses. Most economics majors take between 12 and 15 economics courses.
One of the attractive things about studying economics is that you will acquire many of the skills employers highly value. First, you will have the quantitative skills that are important in many business and government positions. Second, you will acquire the writing skills necessary in almost all lines of work. Third, and perhaps most importantly, you will develop the thinking skills that almost all employers agree are critical to success.
A study published in the 1998 edition of the Journal of Economic Education ranked economics majors as having the highest average scores on the Law School Admission Test (LSAT). Also, consider the words of the Royal Economic Society: “One of the things that makes economics graduates so employable is that the subject teaches you to think in a careful and precise way. The fundamental economic issue is how society decides to allocate its resources: how the costs and benefits of a course of action can be evaluated and compared, and how appropriate choices can be made. A degree in economics gives a training in decision making principles, providing a skill applicable in a very wide range of careers.”
Keep in mind, too, that economics is one of the most popular majors at some of the most respected universities in the country. As of this writing, economics is the top major at Harvard, Princeton, Columbia, Stanford, University of Pennsylvania, and University of Chicago. It is the second most popular major at Brown, Yale, and the University of California at Berkeley. It is the third most popular major at Cornell and Dartmouth.
What Do Economists Do?
Employment for economists is projected to grow between 21 and 35 percent between 2000 and 2010. According to the Occupational Outlook Handbook:
Opportunities for economists should be best in private industry, especially in research, testing, and consulting firms, as more companies contract out for economic research services. The growing complexity of the global economy, competition, and increased reliance on quantitative methods for analyzing the current value of future funds, business trends, sales, and purchasing should spur demand for economists. The growing need for economic analyses in virtually every industry should result in additional jobs for economists.
Today, economists work in many varied fields. Here are some of the fields and some of the positions economists hold in those fields:
High School Teacher
Chief Executive Officer
Think Tank Analyst
Economists do a myriad of things. For example, in business, economists often analyze economic conditions, make forecasts, offer strategic planning initiatives, collect and analyze data, predict exchange rate movements, and review regulatory policies, among other things. In government, economists collect and analyze data, analyze international economic situations, research monetary conditions, advise on policy, and much more. As private consultants, economists work with accountants, business executives, government officials, educators, financial firms, labor unions, state and local governments, and others.
Median annual earnings of economists were $64,830 in 2000. The middle 50 percent earned between $47,370 and $87,890. The lowest 10 percent earned less than $35,690, and the highest 10 percent earned more than $114,580.
Places to Find More Information
If you are interested in an economics major and perhaps a career in economics, here are some places where you can go and some people you can speak with to acquire more information:
• To learn about the economics curriculum, we urge you to speak with the economics professors at Cal State San Marcos. Ask them what courses you would have to take as an economics major. Ask them what elective courses are available. In addition, ask them why they chose to study economics. What is it about economics that interested them?
• For more information about salaries and what economists do, you may want to visit the Occupational Outlook Handbook Web site at http://www.bls.gov/oco/
• For starting salary information, you may want to visit the National Association of Colleges and Employers Web site at http://www.naceweb.org/
• To see a list of famous people who have majored in economics, go to http://www.marietta.edu/~ema/econ/famous.html
Choosing a major is a big decision and therefore should not be made too quickly and without much thought. In this short appendix, we have provided you with some information about an economics major and a career in economics. Economics may not be for everyone (in fact, economists would say that if it were, many of the benefits of specialization would be lost), but it may be right for you. It is a major where many of today’s most marketable skills are acquired—the skills of good writing, quantitative analysis, and thinking. It is a major in which professors and students daily ask and answer some very interesting and relevant questions. It is a major that is highly regarded by employers. It may just be the right major for you. Give it some thought.