Economics Popular With College Students

For an increasing number of college students, the utility of studying economics outweighs the opportunity costs of forgoing art history or astrophysics.

In its summer edition, the Journal of Economic Education will publish a paper by Vanderbilt professor John J. Siegfried that finds that more college students are graduating with degrees in economics, continuing a trend of increased enrollments in economics departments since 1996.

After rising 7.7 and 10.5 percent in 2002 and 2003, respectively, the number of bachelor’s degrees awarded in economics rose 4.7 percent last year, to 16,141 nationally at the 272 colleges Siegfried surveyed.

Siegfried attributed recent increases in the popularity of the economics majornot to a marketplace or political sea change, but to a market readjustment to long-term equilibrium.

“The main reason for the rapid economic growth in the economics major (which actually is not all that rapid...) is a recovery from an abrupt decline of about 30% from 1992-95,” Siegfried wrote in an e-mail.

Two previous studies co-authored by Siegfried, “International Trends in Economics Degrees During the 1990s,” with David K. Round, and “Long-Run Trends in Economics Bachelor’s Degrees,” with Robert A. Margo, investigated fluctuations in the numbers of students majoring in economics and found a link with long-term equilibration rather than short-term changes in or outside academia.

These changes have occurred at the macro level, and are not necessarily common to all individual institutions.

Princeton’s undergraduate department has seen fairly stable enrollment, according to Princeton professor Avinash Dixit, while some other popular humanities and social science majors have seen their number of students fall.

Dixit added that the edge of economics was intellectual, in that it combined a scientific approach with social concerns while also serving as solid preparation for a wide range of careers or advanced fields of studies.

“Economics majors can acquire [analytic and quantitative reasoning] skills without having to commit themselves too early to a specific track, as they would if they majored in business administration (in universities where such an undergraduate major is available) or accountancy or such subjects,” Dixit wrote. “In other words, economics has high ‘option value’ in the process of making a career choice.”

While Dixit emphasized the flexibility of an economics major, Siegfried emphasized that trends in numbers of economics concentrators nationwide do not correlate with the perception that the degree will confer an edge in the job market. His research has not substantiated that the difficulty of finding a job is linked to economics degrees.

“Unemployment rates are pretty low right now, but economics degrees continue to grow. If the cause of the increased interest in economics is a weak job market, I would expect economics enrollments to be slowing about now,” he wrote.

Nor, he added, can it be traced to a long-term strategic shift accompanying globalization. Siegfried did write that economics graduates tend to take jobs in finance, insurance, and real estate, and that because such “FIRE” jobs are often service jobs that are more difficult to send overseas, “there may have been an increase in the relative share of jobs available to economics graduates.”

For many students, economics is the next best thing to an undergraduate business program where no pre-business major exists.

“Of course I cannot deny that at Princeton (and perhaps also at Harvard), some students choose economics as being the closest substitute to a business major they would have really liked to choose,” Dixit wrote.

In a 1982 study published in the American Economic Review, Siegfried and J.T. Wilkinson found that “the presence of a competing undergraduate business major at the same university is likely to reduce the number of economics students by more than the entire average-size economics program,” according to Siegfried and David K. Round’s 2001 study “International Trends in Economics Degrees During the 1990s.”

Neither Harvard, Yale, Princeton, Stanford, nor the University of Chicago offer undergraduate business degrees. Nearly one quarter of the graduating class at UChicago majors in economics.

Although private, Ph.D.-granting institutions have not seen large increases in the number of economics degrees awarded masks the fact that they already enroll disproportionately high numbers of economics majors.

Harvard, however, has been subject to fluctuation over the years.

Since 1994, the number of economics concentrators at Harvard has increased all but two years, according to Registrar’s data.

In 1994, 488 students concentrated in economics—by last November, that number was up to 686. In May, 268 students graduated with degrees in economics, while another 72 joint-concentrated, combining economics and another field.

Ropes Professor of Political Economy and department chair Alberto Alesina was baffled by the increases.

“To tell you the truth, I am not sure why it is,” Alesina wrote in an e-mail. “I love the field of economics and I think it is a great way of analyzing socio-politico-economic problems in addition to having a business angle, but why now as opposed to before or later more and more students are realizing this, well I cannot quite say.”

—Staff writer Samuel C. Scott can be reached at sscott@fas.harvard.edu.