If economics is a unique way of thinking, as many economists like to claim, some level of coursework in economics may provide enough specific knowledge and skills to lead students to make different choices in their adult roles as consumers, workers, and voters/citizens. Of course the same could be claimed for training in business and other areas, even though (or perhaps because) it could be argued that most content and training in business courses is more applied and pragmatic than what is presented in economics courses.
Some empirical evidence--though not really a great deal--suggests that training in economics and business is associated with different adult behaviors and outcomes. For example, Golec (1996) finds that mutual funds perform better if mutual fund managers have an MBA, and Chevalier and Ellison (1999) also report a positive correlation between mutual fund performance and the educational background of mutual fund managers. Black, Sanders, and Taylor (2003) found that economics majors earn almost 20% more than graduates in other social science majors, and about 10% more than those who major in business administration. In fields with large numbers of graduates, they find that only engineering majors earn more than economics majors. Similarly, Hecker (1995) reported that males majoring in economics had median earnings 3% higher than all majors for the age cohort of 25-34, and 53% more than average for the cohort aged 35-44. Craft and Baker (2003) find that lawyers with an undergraduate major in economics earn 13% more than otherwise comparable lawyers with other undergraduate majors, and economics is the only major with a statistically significant effect on earnings, (1) Hamermesh and Donald (2008), however, find that higher earnings by economics majors are partly due to economics majors working more hours than others.
The relationship between financial literacy/ knowledge and adult behavior and outcomes in financial markets has been addressed in several recent studies--many sponsored by Federal Reserve Banks. Hilgert, Hogarth, and Beverly (2003) and Braunstein and Welch (2002) find that knowledge about credit, saving, and investment is significantly related to recommended financial practices in cash-flow management, credit management, saving, and investment. Unfortunately, there is also evidence of widespread financial illiteracy in U.S. households, and particularly among elderly women (see Lusardi and Mitchell 2007, 2008).
Employee education programs have been found to affect workers' savings, retirement, and investment behaviors (Bayer, Bernheim, and Scholz 2009; Bernheim and Garret 2003). State mandates for precollege education in personal finance appear to succeed in at least exposing students to more information and sources on financial education, and students from states with such mandates report higher levels of savings and net worth as adults (Bernheim, Garrett, and Maki 2001; Tennyson and Nguyen 2001).
Much less research exists linking college coursework or majoring in economics to personal finance outcomes, (2) but Christiansen, Joensen, and Rangvid (2008) find that those trained in economics (in college courses or employee education programs) are more likely to invest in stocks than those who receive training in other areas. Guiso and Jappelli (2005) report that, among college graduates, having a degree in economics is positively associated with knowledge about financial assets. Chert and Volpe (1998, 107) concluded that business majors had better knowledge about personal financial literacy than other students, but that in general college students were "not knowledgeable about personal finance.'' (3)
In this paper we use a large and unique data set to investigate the relationships between taking college coursework in economics or majoring in economics with long-term labor market and personal finance behaviors and outcomes. Our information on long-term behaviors and outcomes is drawn from a detailed questionnaire we mailed in January 2003 to over 25,000 graduates who attended four public universities in 1976, 1986, or 1996. …