The Value of an Economics Major

"Is economics a good major?" is how students phrase the questions.  "What can you do with an economics major?" is how parents ask it.

First, personal interest and ability play a big role.  It’s a lot easier to major in economics if you love the subject.  I fell in love with it when I was 16 and then just rolled along.  My friend John Goodman, now head of the National Center for Policy Analysis, says that economics were the easiest courses he took.  That’s a good indicator that you have native talent.

But let’s get practical.  First, economics is a way of thinking that will be tremendously valuable in management positions in business, government, or non-profits.  Entrepreneurs, too, will benefit from thinking this way.

Even better, economics is hard.  If it’s easy, just take more advanced courses.  It will get hard.  (If it doesn’t get hard, that’s an indication that you could consider getting a Ph.D.  More on that below.) It’s important to take challenging course work if you ever want to do challenging work after college.  You need to stretch yourself.  I’d much rather see a student who stretched, than one with a 4.0 average in easy courses.

Best of all, economics may help you understand how to push numbers around.  Notice that I said "may."  If you take courses with multiple choice questions, you won’t learn this.  But if you are assigned good projects that require quantitative analysis, you’ll learn what you need to learn.  I’m not even talking high-powered econometrics.  (Some econometrics can set you back, as you focus on the nuances of estimation rather than what the data are saying.)  Try your hand at a project where you need to find some data, correct it for something (like size of the country or seasonality or average weight of pigs in the county), and form a conclusion.  That’s a great value.

If your college has a thesis option, sometimes required to graduate with honors, take it.  You’ll curse the thesis.  (I did.)  You’ll wish you had chosen the easier path of simply taking courses.  But the experience will be very good.  Talk about it in your first job interview.  Go in to the interview with the thesis in mind, ready to explain what you learned regarding getting organized, getting projects done, tracking down data, and meeting the disparate demands of the different members of your thesis committee.  That will sound to the interviewer just like real work.

Better yet, in your first job you’ll have a better handle on how to deal with the new problems.  And if you’re smart, you’ll gravitate to the new problems.  The old problems have been solved.  Sure, corporations will hire college grads to implement the solutions to old problems.  But the challenge–and big rewards–come from solving the new problems.

Should you go to grad school in economics?  In most cases the answer is no.  If you’re not sure what to do after graduation, DO NOT go to graduate school.  Get a job.  Any job.  In fact, if you think your only job option is to sell clothes at The Gap, then do that.  If you learned anything in college, you’ll be managing the store in a couple of years.  You may not want to stay in your first job, but it will help you learn what sorts of work you like and would be good at.

When should someone go to grad school?  When you absolutely refuse to be talked out of it.  When you aren’t listening to arguments about how many years it will take, how low the pay will be afterwards, how much BS you’ll have to put up with.  When these don’t make a difference to you because you simply have to learn all the economics you can possibly learn, OK, you’re grad school material.

If you’re still in college, here’s an idea.  Find a school project that applies economics to a business area.  Develop a research methodology that requires you to interview business people.  (Examples: how companies find employees in areas of low unemployment; how transportation companies deal with high fuel prices; how banks consider the possibility of recession in evaluating business loan applicants.  Be creative and you’ll think of lots more possibilities.)  Now, work the telephone.  Ask for interviews.  Business leaders are suckers for helping bright young students.  Ask good questions.  Listen carefully.    Wait until you’re asked about your career plans to mention that you’re trying to identify an industry or company with good career potential.  Write a thank you letter.  Send the people you interviewed a copy of your finished paper.  Call a month later to ask if they know anyone who’s hiring.

Economics is a great major, but don’t think that you will spend your life as an economist.  In 99% of the cases, you won’t.  But the undergraduate economics major is a great tool for making better decisions throughout your career.