Economics: Good Choice of Major for Future CEOs

By Flynn, Patricia M.; Quinn, Michael A. | American Economist, Spring 2010 | Go to article overview
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Economics: Good Choice of Major for Future CEOs

Flynn, Patricia M., Quinn, Michael A., American Economist

I. Introduction

In discussing whether to major in economics as an undergraduate, the Princeton Review writes that "a thorough working knowledge of how economics shapes businesses is necessary if you're going to become a CEO one day" (Princeton Review 2008). This sentiment is echoed by numerous economics department faculty and websites. Common reasons given for the desirability of economics in this regard are analytical and problem solving skills, knowledge of markets and the "big picture" perspective.

There is some evidence to support the market value of an economics degree. Black, Sanders & Taylor (2003) demonstrate that economics majors earn more advanced degrees in business and in law than other majors. Among baccalaureate degree holders who do not earn a graduate degree, Black, Sanders and Taylor (2003) show more generally that economics majors earn more than their counterparts with other majors. In their study of CEOs, Boone and Kurtz (2001) note that business administration was the most popular undergraduate degree, but that engineering, economics and humanities were also popular majors. (1)

As we demonstrate in this paper, economics majors are not only well represented among leading CEOs, but adjusting for size of the pool of graduates, they have a greater likelihood of being a CEO than any other major. Using CEO data for the Standard and Poor (S&P) 500 companies, we find evidence to support the claim that economics is a good choice for graduates who aspire to become a corporate CEO; this is especially true for economics majors who go on to earn an MBA degree.

The paper proceeds with a discussion of the educational backgrounds of S&P 500 CEOs in 2004. This is followed by a review of trends in degrees awarded at the undergraduate level and in MBAs, including a discussion of the patterns by gender. The paper concludes with a discussion on the likelihood of economics graduates becoming CEOs.

II. Educational Backgrounds of the S&P 500 CEOs (2)

Over 98 percent of the S&P 500 CEOs in 2004 had a bachelor's degree. Liberal arts, science & engineering, and business graduates are all well-represented among these CEOs. Liberal arts graduates comprise the largest group with just over one-third (34.3%) of these business leaders. Economics majors are the largest subset of the liberal arts graduates, with approximately nine percent (9.2%) of the CEOs holding an undergraduate degree in economics. Liberal arts majors in history and political science follow with 5.0% and 4.2% of the CEOs, respectively. Twenty-eight percent (28.1%) of the CEOs have science & engineering degrees, approximately three-quarters of which are in engineering. Another 28.5% of the CEOs have undergraduate degrees in business fields. Dominating the business graduates are business administration majors, who comprise 20.7% of the CEOs; just fewer than five percent (4.8%) of the CEOs are accounting majors, and 3.0% majored in finance.

Thus, the three most prevalent undergraduate majors among these CEOs are business administration, engineering and economics. See Table 1 for the distribution of majors of all the S&P 500 CEOs. While finance is listed separately in this table, the other tables and the analysis will incorporate finance majors in with business majors. This is by necessity as the U.S. Department of Education's National Center for Education Statistics combines business administration, finance, management and marketing into "business majors" (NCES, 2007). S&P 500 CEOs received their undergraduate degrees from over 200 colleges and universities. Nineteen institutions have five or more of these CEOs as undergraduate alumni. The University of Wisconsin leads the list with 17 graduates (3.4% of the total), followed by Harvard University with 15. Princeton University, Stanford University and the University of Texas, each have 10 graduates among the S&P 500 CEOs.

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Economics: Good Choice of Major for Future CEOs


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