It Pays to Study Economics

Sunday, October 18, 2015 - 00:00

Studying economics provides students with a coherent and effective framework for thinking about how the world works. This is essential if we want to understand  how people alter their behaviour once the environment and the incentives they face change. However, two recent studies, one by ​Thomas Carrolla, Djeto Assanea & Jared Busker, available here, and the other from the Hamilton Project, available here, provide an additional reason as to why one should study economics - students who study economics earn significantly more than those who study other disciplines. The study by ​Carrolla, Assanea & Busker shows that part of this wage premium is due to the fact that economics students work in better jobs once they graduate. Interestingly, however they find that about one third of the pay reward is due to economics students getting paid more even when doing the same job. The Hamilton Project shows that this is particularly true when looking at high paid workers. Of the best paid majors in all fields, students who studied economics are ranked first.

Carrolla, Assanea & Busker note that "in a good undergraduate economics program, students develop an ability to think critically: They gain broadly applicable analytic and quantitative skills that improve decision making in a wide range of tasks. In short, it may be that economics majors are better trained than many other majors in skills that have returns in the marketplace."

The evidence from the wages paid to economics graduates certainly supports this view.