Tag: Major Issues

************ Advice for Potential Majors & AIM Placement

Here is our message to those of you thinking about pursuing an economics major (or minor).  For more on the collegiate economics major more generally, here is some information from the American Economics Association.

Advice to Potential Majors:  Students interested in a major in Economics should begin with introductory classes in economics and mathematics.  The first economics class is ECON 100.

Students who have satisfied the ECON 100 requirement should consider taking 200-level classes based on their own interests (e.g., 200 Development Economics, 205 International Economics, 225 Decision Theory, 245 Law & Economics, 280 Environmental Economics, 290 Economics of Medical Care).

There are three intermediate theory courses that are offered sequentially each year – ECON 300 Microeconomics in the fall, ECON 380 Econometrics in the winter, ECON 320 in the spring.  These courses are most effective when taken sequentially in either the sophomore or junior year.  Freshman should not enroll in these courses.

Sophomore year is a good time to take ECON 225 Decision Theory.   This is not a required course, but we strongly recommend it for all majors and minors.

Mathematics Requirements and Advice:  The introductory mathematics courses are essential because they are foundational to intermediate theory courses.  Calculus (MATH 120 and 130 or MATH 140) is a prerequisite for ECON 300 and ECON 320.  Statistics (MATH 107 or the equivalent) is a prerequisite for ECON 380.

For the purposes of the Economics Department, we believe students should consider MATH 120 and 130 if they are interested in applied problem solving and developing some Excel skills.   Students who plan to take math beyond the calculus sequence should take MATH 140.   The decision on which calculus to take is probably worth a discussion both with the math and the econ department faculty.

A typical sequence for a student who comes in as an economics major.

Freshman: Introductory Economics (ECON 100), 200-level courses based on student interest, Calculus (MATH 120 and 130 or MATH 140).

Sophomore:  Intermediate sequence (ECON 300, 380, 320), 200-level courses based on student interest, Statistics (MATH 107).  ECON 300 and MATH 107 are offered in the fall.

Junior-Senior: Advanced electives.

This sequence can be pushed back a year for those who decide during their sophomore year to pursue an economics degree.

MINOR: The minor requirements are indeed minor.  No significant planning is necessary during the Freshman year to complete this degree, though our recommendations in terms of taking introductory economics and mathematics courses remain the same for majors and minors alike.

 

AIM Placement: If you scored a 4 or 5 on the AP micro test, you can obtain credit through the Registrar’s office for ECON 100.  This satisfies that requirement for the department, though we strongly suggest you take at least one 200-level course before beginning the 300 sequence.  Talk to a faculty member in economics for appropriate recommendations.

If you earned a 4 or a 5 on the AP macro test, you can obtain 6 units of Lawrence credit, and you should take Economics 100.

“You could walk out rich. Rich!”

Jordan Weissmann at Slate has a fabulous opening in his most recent post:

Want to guarantee yourself a steady, well-paid career? Major in engineering. Want to take a shot at striking it rich? Then major in economics.

Now, I realize that money isn’t everything, it can’t buy you love, etc, etc… but the idea that economics majors are disproportionately represented at the top of the income distribution is too tempting to pass by.  Weissmann draws this conclusion after looking at a Hamilton Project report and an accompanying interactive tool that probes the distribution rather than the average earnings of various college majors (as well as comparing a college degree to various other levels of education).  As one might expect, the college degree is still a premium, and you can bank on quantitative skills:

Majors that emphasize quantitative skills tend to have graduates with the highest lifetime earnings. The highest-earning majors are those in engineering fields, computer science, operations and logistics, physics, economics, and finance.

That takes care of average earnings.   But the Hamilton Project does something clever and plots the distribution of lifetime earnings by major.  Here, Weissmann shows the lifetime present discounted value of earnings for a selection of popular majors — engineering, English, business administration.   Note that the median (50th percentile) engineering major earns more than the other majors, but as you move to the upper-end of the distribution, economics majors make considerably more money:

Economists surpass engineers at about the 60th percentile and the highest-paid econ grads can expect to make $3 million more (in NPV terms) than the highest-paid engineering grads.  Notice that economics and business management are not close substitutes at all in the figure, as the management grads don’t fare nearly as well at any point in the distribution, and certainly not at the  top. That observation is possibly consistent with some evidence on who becomes a CEO.

The lifetime earnings calculation is not a straight number, but a present value calculation at a 3% discount rate.  To provide a wee bit of perspective, an individual that graduated college into a $50,000 per year job and got a 3% raise every year would retire at age 65 with an income of approximately $175,000.  The NPV of that individual’s lifetime earnings would be just north of $2 million, which is right about the median lifetime earnings of a typical engineering and econ graduate. Not bad, but not exactly the 1%, either.

The interactive tool is pretty cool.  I changed the majors to include computer science, mathematics, and art history.  Predictably, the art history majors lag behind the other disciplines, but it is interesting to note that the top-earning, say, 10% of art history graduates have lifetime earnings higher than about 70% of the economics graduates.

Earnings Data

The thread title, of course, is a quote from Ben Loman.

Advice to Potential Majors

Students interested in a major in Economics should begin with introductory classes in economics and mathematics.  The first economics class is ECON 100.*

Students who have taken intro or who have Advanced Placement credit should consider taking 200-level classes based on their own interests (e.g., 200 Development Economics, 205 International Economics, 245 Law & Economics, 280 Environmental Economics).

There are three intermediate theory courses that are offered sequentially each year – ECON 300 Microeconomics in the fall, ECON 380 Econometrics in the winter, ECON 320 in the spring.  These courses are most effective when taken sequentially in either the sophomore or junior year.  Freshman should not enroll in these courses.

Sophomore year is a good time to take ECON 225 Decision Theory.   This is not a required course, but we recommend it for all majors and minors.

The introductory mathematics courses are essential because they are foundational both to intermediate theory courses and to elementary statistics.  Calculus (MATH 120 and 130 or MATH 140) is a prerequisite for ECON 300 and ECON 320.  Calculus is also a prerequisite for Statistics (MATH 207), and Statistics (MATH 107 or the equivalent) is a prerequisite for ECON 380.

For the purposes of the Economics Department, we believe students should consider MATH 120 and 130 if they are interested in applied problem solving and developing some Excel skills.   Students who plan to take math beyond the calculus sequence should take MATH 140.   The decision on which calculus to take is probably worth a discussion both with the math and the econ department faculty.

A typical sequence for a student who comes in as an economics major.

Freshman:          Introductory Economics (ECON 100), 200-level courses based on student interest, Calculus (MATH 120 and 130 or MATH 140).

Sophomore:       Intermediate sequence (ECON 300, 380, 320), 200-level courses based on student interest, Statistics (MATH 207 107).  ECON 300 and MATH 207  107 are offered in the fall.

Junior-Senior:    Advanced electives.

 This sequence can be pushed back a year for those who decide during their sophomore year to pursue an economics degree.

MINOR: At this point the minor requirements are indeed minor.  No significant planning is necessary during the Freshman year to complete this degree, though our recommendations in terms of taking introductory economics and mathematics courses remains the same for majors and minors alike.