Art Carden  

Why Should You Major in Economics?

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Fall semester has started, and I hope you're settled in. If you're a college freshman or sophomore, you might be trying to choose a major. If you're a high school junior or senior, you might be thinking about what you want to study once you get to college. Here are a few reasons to major in economics:

1. Economics is a General-Purpose Intellectual Technology. It's true that economics can't tell you whether God exists and isn't going to tell you what happens when you mix Chemical A and Chemical B, but an economics degree gives you a set of intellectual tools that can be adapted to any social problem. Economics is about a lot more than money, banking, and interest rates. Recent examples of extremely interesting applications of economics to subjects that might not, at first glance, look like what most people think of as economics include David Skarbek's work on prison gangs, Chris Coyne's work on war, and David Romer's work on whether football teams go for it on fourth down often enough. If you want to understand the social world, you should study economics.

2. Since Economics is a General-Purpose Intellectual Technology, you can do almost anything with an economics major. Want to go to law school? You should major in economics. Interested in graduate school in public policy? Major in economics.

3. Economics is a Complement to Information Technology. Data and computing power are getting cheaper by the second. Economics helps us sort through the data to figure out what is really going on.

4. Economics Pays Well and Is The Most Employable of the Non-Vocational Majors. Co-blogger Bryan Caplan has written on this a few times; he calls economics "the highest-paid of all the easy majors," noting that it "does not put the crimp on your social life that CS or Engineering do." When Bryan writes "easy majors," he is using STEM fields as his basis for comparison. In economics, you can study a lot of the same things you would study in the other social sciences and humanities, but the degree is more employable than a degree in the humanities or the other social sciences.

5. "Economics is Both Practical and Interesting." That's what Jeffrey Miron says in his 2008 discussion of the economics major. Economics is a major that strikes a very nice balance between a liberal arts education and a vocational education.

This last point is really, really important. I started college wanting to be a stockbroker. I took principles of microeconomics, and it blew my mind. I thought I knew something about economics before starting college; however, that simply wasn't the case. I started thinking "maybe I want to be an economics professor," and that was solidified when I took principles of macroeconomics. In asking whether economics is a "Mickey Mouse major," Bryan notes that the skills economics majors are likely to use in the workforce are discounting cash flows and doing basic statistics. I think you'll learn more than this: a nuanced understanding of opportunity cost will make you a better decision-maker and a better citizen. More than the practical skills, however, economics invites you to understand the world and gives you the tools that will help you do it. It rocked my world when I first started studying it seriously, and it continues to rock my world day in and day out. And that's a pretty nice way to live.


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COMMENTS (10 to date)
Ken from Ohio writes:

Thanks - great information.

If I could turn back the clock I would have majored in Econ (like my smart brother who is now a lawyer) instead of chemistry.

I will give this post to my daughter (high school senior). She is very good in math and science, but prefers social studies. Seems like Econ is a perfect fit.

Bryan writes:

I majored in political science with a minor in philosophy for many of the same reasons, and got a little economics too boot.

But just like Ken, knowing what I know now, I would probably go the economics route if I had to do it all over again.

I'm not sure whether my outlook changed, or society's outlook changed, but I don't think I viewed it as having the same cache as I do now.

Finch writes:

I enjoyed this, but it's somewhat dated. In the modern world, undergraduate economics is basically software engineering-lite with a side of stats. That's a good thing. But if you take it and try to make it as humanities-like as possible, you're doing it wrong and severely limiting your employability.

The best part of undergraduate economics is the experience of working with data, which employers want.

mike davis writes:

I thought stuff like this might be true right after I took my very first econ class (An awesome, life changing experience. Thank you John Kuhlman.) I heard stuff like this as I began studying economics more seriously. I said stuff like this when I began teaching economics.

However…..

This sounds a lot like the local football coach telling the Rotary Club how important high school football is to the community. We should always remember that almost all of us pro-econ cheerleaders are (a) people who had the distinct intellectual history that made us who we are and (b) people whose self-esteem and professional success depend on making econ seem very, very important. This doesn’t mean we’re being disingenuous and it certainly doesn’t mean we’re wrong. But we are running a real risk of closing our minds to other ideas.

Case in point:

I’m teaching Principles for the first time in 20 years and just now getting to the part where I talk about price controls. I gave the kids Munger’s essay on price gouging laws after Hurricane Fran titled “They Clapped”. (Synopsis: A hurricane hits Raleigh, NC. Outsiders bring desperately needed ice to city, but they charge the market price, not the much lower price required by the anti-gouging laws. The cops arrest the price “gougers” and impound the ice, thus preventing willing buyers from acquiring the precious ice. The willing buyers cheer the cops. Munger is confused.) I’m totally on-board with Munger’s main point, that prices send valuable signals and that price ceilings are a bad idea. (If a kid learns that in college econ, we should be happy. But the mob in NC clapped for a reason, and it wasn’t just because they hadn’t taken Munger’s class. We should try and understand why they clapped. And we should absolutely challenge our students to explain why they clapped and not simply tell them that econ explains everything we need to know either about how people should behave or why they behave they way they do.

Bostonian writes:

It's easier to teach yourself economics outside of college than it is to teach yourself biology, chemistry, or physics. Therefore majoring in a science may preserve more options.

Business and economics majors attract students for whom making a lot of money is a priority. If you asked entering freshman "How important is making a lot of money to you, on a 1-5 scale", and you regressed post-college income on college major and survey-based materialism, I think you would find that the coefficient on the economics major dummy variable would decline once you included the materialism variable.

If you get into a good college, and you major in history rather than economics, and you still take a few economics courses, I wonder if the decision to major in history hurts you much. Deciding to go to graduate school in history is the financial blunder.

I think it's fine for interested students to major in economics, but I doubt that students majoring in other real subjects that interest them are hurting themselves, as long as they
(1) take one or two economics courses and
(2) don't think (as I did when younger) that the only suitable follow up to major in X is going to graduate school in X.

BZ writes:

That comment about C.S. majors hit a little too close to home. Between hitting on the one or two girls in the Math "lab" and late night LAN parties with the guys, we had no idea.

Mark V Anderson writes:

When you say that economics is the most marketable of the "easy" majors, I think we need to look at how much more marketable than say history, and how much less marketable than say accounting. I suspect the gap between econ and acct is much greater than that between econ and history, especially if you don't go to grad school. I would like to see data.

Speaking as an accounting major who wanted to have a job when he finished school, and someone who strongly encouraged his kids to get vocational-type majors.

dullgeek writes:

Admittedly, I was a CS major from a different time. I graduated from college in 1992 with a degree in computer science. Then CS didn't hold the high profile position that it does today. So maybe times have changed things. But it seems to me that CS didn't put a crimp in my social life. It's true that I didn't have a social life. But that correlation doesn't say anything about the causation.

Frankly, I think both my lack of a social life and my attraction to CS were caused by a 3rd thing: my ability to focus to the exclusion of most normal things. The result was that it was normal to be in the computer lab working on a problem only to leave and not know if it was this morning or yesterday morning that I'd arrived and not having eaten anything since arriving. That same level of focus also meant frequently ignoring all of the things that are required to maintain normal social interactions.

I've, of course, since grown quite a bit, and learned how to better exercise social skills. To the point that being social is now a joy in my life where it used to be a burden. But I still will often get a call from my wife reminding me that I do have to come home at some point.

As far as the topic at hand, I only started reading about economics in 2001. And since then, I really regret that I didn't take it as a minor - or possibly a second major. But it's hard to imagine it being a substitute for my CS degree. Perhaps I'd find economics equally satisfying, but I struggle to imagine a better match for a lifetime of satisfying work than me and computer science. I think that studying economics has helped me be a better employee in my field. But the first thing that helped me be a good employee was studying computer science. And, although I wish I'd supllemented it with economics, I wouldn't trade it.

Jeff writes:

I majored in economics because I fell in love with it during my first principles of microeconomics course at night school when I was stationed at Fort Devens. Economics is a way of thinking about the world that explains more about how societies work than any other approach.

But once I started really looking into it as a major, I quickly discovered that it was mostly useless in terms of employment. Much better to major in Finance or Accounting if you wanted an indoor job. This was back in the early 1980's. If I knew then what I know now, I would have done computer science.

So I went on to get a PhD in Economics because it's the only way you can actually work as an economist. Graduate work in econ, however, is nothing at all like the undergraduate major. It's no longer about understanding the world, it's about manipulating mathematical models and trying to be clever. I don't advise anyone to go into it.

AriT writes:

I'm also considering switching to econ after my degree, because I find many questions in econ a lot more interesting than in my own field. Seems like a lot of pain though.

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