The Economics Degree 

All right, you're halfway through your economics course. Or you've just started, or maybe just finished! And you like what you see. Have you thought about majoring in economics? What's involved? How hard is it? What are the benefits of an economics major? Let's take a stab at giving you some answers: 
Where to learn more 
Occupational Outlook Handbook--Economists 
The Bureau of Labor Statistics publishes information on economics as a career: 
What Is Economics? 
Let's start with what economics isn't.  Economics isn't a meal ticket to make lots of money in the stock market, although economics helps you understand how stock markets and other markets work. Economics also isn't a business degree, although economics teaches important business skills. Economics, first and foremost, is a social science.  As such, economics helps to explain the mysteries of how people and society operate.  

Economics is defined as the study of how people choose to use their scarce resources in an attempt to satisfy their unlimited wants. In other words, we have unlimited possibilities in life to do whatever we want, but we are limited by the resources we have to do these things. Think, for example, why you don't own a ferrari or a porsche (if you do, congratulations). You probably can't afford to purchase these expensive automobiles, or even if you can, this is not the best use of your money. You may want a ferrari, and in fact there is no prohibition against your buying a ferrari. But you don't have the resources--namely, money--to buy a ferrari. 

Take this one step further. Why don't you go to the movies every night, or go out dancing until 2 AM every evening? You may want to, even prefer to, but you can't because you have homework, or a job, or both. Even if you could financially afford this lifestyle, your time is a scarce resource. You need to spend time studying or working which prevents you from movie watching and dancing. 

Economics builds scientific models to explain why people behave the way they do. And economists use these models, in conjunction with their observations of the world, to analyze and explain why things happen the way they do. 

Does this sound boring? It shouldn't. Again, economics is about solving problems. Even more, economics is about finding the truth, even if the truth may go counter to what you, and most people, may intuitively believe. As one economist put it, economics is about paradoxes, about providing answers to riddles that are contrary to accepted opinion yet are true. Think about a few such paradoxes: 

Supermodels and athletes may be better off bypassing college for professional work than by attending college. Why? The potential income they forego by attending school is greater than the benefit a college degree brings to a supermodel or star athlete. This is not to say that education is bad, or supermodels can't afford college; rather, it simply says that the allocation of time is better spent working than by attending school. 

Traffic jams can be prevented. Traffic jams seem to be a necessary evil, right? What if drivers needed to pay a toll, say $1, during busy rush hours. This would certainly prevent some drivers who didn't need to drive from driving during rush hour, and traffic congestion would lessen. In economics, driving is a want and freeways, time, and money are resources. If we could better allocate these resources, then we could lessen traffic. 

It's kind of fun, isn't it?  This is what economics is all about--finding answers to problems that are not always as they seem to be.  

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Where to learn more 
Don't just take our word for it. Check out what your economics department has to say, or visit the economics departments at these schools: 
Why Major in Economics?  
Why major in economics? As discussed above, economics teaches valuable skills and problem-solving techniques that will help you solve the mysteries life presents, not to mention be the hit of cocktail parties. But there's another reason. Namely, jobs, and decent-paying ones at that. In addition to academia and government, economists work in all facets of the business world, including manufacturing, mining, banking, insurance, and retailing. Not to mention sports, recreation, entertainment, and technology. 

Why do businesses need economists?  First, economists are trained to think analytically and critically to solve complex problems. Second, and relatedly, economists is a social science, and as such economists are trained to recognize human behavior in relation to work, production, distribution and consumption, the fundamental operations of most businesses. 

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Where to learn more 
The National Association for Business Economics (NABE)   
The NABE is a non-profit organization whose goal is to enhance the careers of people applying economics in their work.   

Job Openings for Economists (JOE)  
The JOE is provided jointly by the American Economic Association and the Economics Department of the University of Texas at Austin. 

European Job Openings for Economists (E-JOE) 
E-JOE is a web site for the announcement of job openings for economists in Europe. It is a joint effort by the Department of Economics at the Technical University Berlin and the European Economic Association (EEA)

What Jobs Are Available to Economics Majors? 
As we discussed above, economists are prized assets in the workforce.  Let's examine in more detail the where economists find jobs. 

Business Economists 
Businesses began to hire economists in increasing numbers shortly after World War II, and the economics profession has grown rapidly ever since. Both large and small firms hire economists. Large firms tend to have whole divisions dedicated to economic research, with a number of economists addressing specialized areas.  Smaller firms, on the other hand, tend to hire only one or two economists to address a number of general areas: planning, forecasting, finance, and other duties. 

The role of the economist may differ from that of the manager. Economists analyze data and provide information; the manager uses this information to make decisions. The public profile may not be there, but the power of the information is great. This may explain why so many corporate CEOs rose to their positions through the economics division. 

Where do business economists tend to spend their time on the job? Take a look at the following table: 
 
Job Task Percentage of Time
Forecasting and analysis of U.S. economy 21%
Industry forecasting and analysis 24%
International forecasting and analysis 14%
Product forecasting, microeconomics 10%
Domestic policy analysis 8%
Other areas of analysis 14%
Administration 9%
Source: Dennis K. Hoover, "Business Economists: Not Just Forecasters," Business Economics 27 (July 1992): 56-59. 
 
Economists in the Government and Academe 
Almost all government agencies hire economists, and most high schools and colleges hire economics teachers. Often, an advanced degree, whether a master's or doctoral degree or a teaching certificate, is needed for these jobs, although this isn't always the case. 

In the federal government, both Congress and the Executive Branch have economic advisors. For example, the president has the Council of Economic Advisors and Congress has the Congressional Budget Office to supply economic analysis. 

As well, most departments have agencies established to perform economic research and analysis. For example, the Labor Department relies on the the Bureau of Labor Statistics to act as the principal fact-finding agency in the broad field of labor economics and statistics. The Commerce Department relies on the Bureau of Economic Analysis to act as the nation's economic accountant, preparing estimates that illuminate key national, international, and regional aspects of the U.S. economy. The Department of Agriculture relies on the Agricultural Research Service and the Environmental Protection Agency  relies on the Office of Policy, Planning, and Development. The list goes on. 

State and local governments also hire economists to perform similar tasks as their federal counterparts. 

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Where to learn more 
Occupational Outlook Handbook--Economists 
The Bureau of Labor Statistics publishes information on earnings for economists. 
     
How Much Do Economists Get Paid? 
Salary shouldn't be the only factor that influences your career choice, but neither should it be ignored. And it's hard to ignore these numbers. According to a 1994 survey, the median starting salary for economists was $31,300 a year. Take a look at the following information, taken from the Bureau of Labor Statistics Occupational Outlook Handbook, for a further breakdown: 
 
According to a 1997 salary survey by the National Association of Colleges and Employers, persons with a bachelor's degree in economics received offers averaging $31,300 a year. 

The median base salary of business economists in 1996 was $73,000, according to a survey by the National Association of Business Economists. The median entry-level salary was about $35,000, with most new entrants' possessing a masters degree. Ninety three percent of the respondents held advanced degrees. The highest salaries were reported by those who had a Ph.D., with a median salary of $85,000. Master's degree holders earned a median salary of $65,500, while bachelor's degree holders earned $60,000. The highest paid business economists were in the securities and investment industry, which reported a median income of $100,000, followed by banking and mining at $93,000 and the nondurable manufacturing industry at $87,000. The lowest paid were in government and nonprofit research. 

Perhaps more important than starting salary, however, is the fact that economists with an advanced degree appear to have better promotion opportunities. The entrance salary for economists having a bachelor's degree was about $19,500 a year in 1997; however, those with superior academic records could begin at $24,200. Those having a master's degree could qualify for positions at an annual salary of $29,600. Those with a Ph.D. could begin at $35,800, while some individuals with experience and an advanced degree could start at $42,900. Thus, staying in (or returning to) school to get a master's and/or Ph.D. may be a wise move. 

Economists' salaries increase with experience. In 1994, the median base salary for economists of all experience levels was $70,000. Additionally, more than half of all economists (58 percent) earned $10,000 in extra compensation (overtime of bonuses) from their jobs and a quarter of all full-time economists earned another $5,000 from "professional secondary income"--usually teaching or consulting. 

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Where to learn more 
Visit a few economics departments around the country to get an idea of the course load required for an economics major. (Don't forget to see if your own college has this information on the Web. If not, stop by the department to pick up a printed copy of this information). For a more complete listing, visit Economics Departments, Institutes and Research Centers in the World (EDIRC) at the University of Quebec at Montreal:  
What Course work Is Involved for an Economics Major and an Economics Minor? 

Economics Major 
An economics degree, unlike an accounting degree or an engineering degree, is a general degree intended to teach problem-solving techniques as well as basic economic principles. Thus, you will typically take a variety of courses, such as statistics, calculus, and computer science, in addition to your economics classes. Keep in mind what your career goals are as you plan what classes to take.  Two courses in calculus, for example, is the bare minimum most schools require for graduate work. 

As an economics major, what economics courses will you take? Typically, you will take the following economics course: 

  • Principles of Microeconomics
  • Principles of Macroeconomics
  • Intermediate Microeconomics
  • Intermediate Macroeconomics. 
There will likely be some flexibility to choose the rest of your elective economics courses. Typical course include: 
  • Money and Banking
  • Economic Thought 
  • Economic Systems 
  • Development Economics
  • Econometrics 
  • Public Economics 
  • International Economics 
  • Industrial Organization 
  • Labor Economics 
  • Health, Education, and Welfare. 
To get a better idea what these course are about, browse our catalog, which has a listing of books with descriptions for these courses. 

Economics Minor 
Many schools offer the opportunity to minor in economics. Like majors, you typically will take the following economics course: 

  • Principles of Microeconomics
  • Principles of Macroeconomics
  • Intermediate Microeconomics
  • Intermediate Macroeconomics. 
However, most minors are only required to take one or two electives from the list above. As well, the math requirements tend to be less stringent. 

To get a better idea what these course are about, browse our catalog, which has a listing of books with descriptions for these courses. 

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Where to learn more
WebEc Index to Economics Journals
WebEc maintains a links to online journal information. 

Amazon.com Recommended Economics Titles
Amazon.com provides articles and information on the latest economics titles .

Further Reading 
If the study of economics has whetted your appetite, there are plenty of places to go and things to read to learn more. Here are a few of the publications most economists have on their desk or bookshelf (or in their computer). 

Newspapers 
Wall Street Journal--The primary daily newspaper for business and economics. A must read everyday. 
The New York Times--The New York Times is another good source for daily business and economics news.  

Magazines 
Business Week--Another primary source for business and economics news, published weekly. 
The Economist--Published in England, The Economist is a good source for economic analysis on newsworthy issues 

Journals 
Journal of Economic Perspectives (JEP)--Most economics journals are far too technical for introductory students. This is one of the reasons the American Economic Association founded this journal in 1987. Many of the papers in JEP are commissioned surveys for nonspecialists, and most are written by well-known experts in the field. 
American Economic Review--The American Economics Association also publishes this journal and, while many of the articles are beyond the scope of the introductory student, some articles, especially those taken from the annual meeting of the Association, are fairly accessible. 

Books 
The Armchair Economist : Economics and Everyday Life--The Armchair Economist, by Steven E. Landsburg, shows how economic thinking illuminates the entire range of human behavior. Instead of focusing on the workings of financial markets, international trade, and other topics distant from the experience of most readers, Landsburg mines the details of daily life to reveal what the laws of economics tell us about ourselves. 
 
Economics Explained : Everything You Need to Know About How the Economy Works and Where It's Going--Economics Explained, by Robert L. Heilbroner and Lester C. Thurow, is the substantially revised and updated third edition of their primer on economics. Heilbroner and Thurow are two of today's better-known economists.

Wealth of Nations--Perhaps the premier treatise on economics, Adam Smith's classic is actually quite readable and still relevant over 220 years since its first publication.

Principles of Economics--Principles of Economics, by Alfred Marshall, was the first economics textbook ever written, published in 1890. 

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Sources: A number of South-Western titles contributed to this article and, in particular, Chapter 26, The Economic Degree, from Principles of Economics, William S. Brown, West Publishing, 1995. 

Copyright © 1998 South-Western College Publishing, All Rights Reserved.