Academic journal article Economic Inquiry

The Economic Reward for Studying Economics

Academic journal article Economic Inquiry

The Economic Reward for Studying Economics

Article excerpt


Each year, college students must select a major from a bewildering array of choices. Academic advisors extol the aesthetic beauty, social value, intellectual rigor, and inherent interest of the various disciplines, and they emphasize the value of their own department's major as preparation for students' future career paths. Economists in particular point to the economics major as providing solid grounding for a variety of real-world careers--from public policy analyst to executive--and as a good background for further graduate work in economics, business, and law.

The information we pass on to our students is based largely on a collection of anecdotes, and this advice is often met with well-founded skepticism. Students and parents understand that academic advice often comes from individuals who have an incentive to steer students toward majoring in their own departments. Little concrete information is provided about the actual economic success of graduates based on their choice of college major.

In this article, we use a unique data set of over 85,000 college-educated respondents to calculate the wages of college graduates by their major. We focus on two broad issues. First, we consider college graduates who do not pursue post bachelor's education. We ask how the-wages of the economics majors compare to demographically similar individuals who choose other college majors. We also provide evidence about the occupations held by economics majors. Second, we consider evidence about graduate-level education for economics majors. We find that over 40% of economics majors have earned graduate degrees, most commonly in business or law. We examine the wages of workers who have obtained a master's degree in business or a law degree and ask how wages of the economics undergraduate majors differ from those of other majors.

Our results can be summarized as follows: Among college graduates with no advanced degrees, economics majors generally fare well, earning significantly more than graduates with the most popular major, business administration, and more than other social science majors, humanities majors, and arts majors. Only engineering majors earn significantly more than economics majors. Among individuals who pursue a master's degree in business or a professional degree in law, those who have an undergraduate economics major generally earn more than individuals with other majors (the only exception being the chemical engineering major as a background for the MBA).


We use the 1993 National Survey of College Graduates (NSCG) to examine the college majors of full-time workers. The NSCG stems from an initiative of the National Science Foundation (NSF) that compiled information on scientists and engineers in the United States. The NSF and the Bureau of the Census conducted a survey based on the 1990 Decennial Census Long Form sampling frame, with the sample limited to those with at least a baccalaureate degree and who were age 72 or younger as of 1 April 1990. The Census Bureau drew a stratified sample of 214,643 respondents, first contacting individuals with a mail survey and then, if necessary, with a telephone or in-person interview. In the collection of these data, a great deal of attention was paid to the accuracy of the education responses, and detailed information was gathered about the majors of the respondents for up to three degrees.

From the original 1990 sample, a few members had emigrated from the United States (2,132), died (2,407), were institutionalized (157), or were over 75 years old (211) and were hence out of the survey's scope. Surprisingly, 14,319 respondents were also excluded from the sample because they had no four-year college degree despite reporting a four-year degree on the 1990 Census. (1) Another 46,487 declined to participate. (2) This results in a (weighted) response rate of 80%, or a sample of 148,928 respondents. …

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