How To Use Economics To Make Money
Want to become rich? Major in economics
Majoring in economics can boost a graduate'south early on-career income by several thousand dollars, at least for those who alive in California.
Credit: Patrick McMullan / Getty Images
Key Takeaways
- Getting a college degree is not adequate to maximize one's potential earnings; choice of major also matters.
- Students who major in economics oftentimes out-earn non-economics majors.
- The income gap can be large enough that information technology is roughly similar to the earnings gap between those who go to higher and those who do not.
Higher students oft do non call back far alee about the ramifications of their choice of major. But the reality is that what yous study in college really does matter. And a new study, published in American Economic Journal: Applied Economics, puts this in very stark terms: Economics majors make a lot more money.
Study money, make money
The authors, Zachary Bleemer and Aashish Mehta, reviewed data on graduates from the Academy of California-Santa Cruz (UCSC) who took introductory economic science courses at some point during their studies. Some of these students went on to major in economics, while others did not. Importantly, UCSC requires that students earn a GPA of at least 2.viii to exist immune to declare economics as their major.
Past examining historical information on students enrolled betwixt 2000 and 2014 and comparing it with employment records (for those who remained in the land of California afterward graduation), the researchers were able to determine the fiscal benefit of majoring in economics.
Every bit shown in the higher up graph, known every bit a regression discontinuity (considering of the "discontinuous" nature of the data in a higher place and beneath the GPA of 2.eight), a sizable jump in salary occurs equally a student's GPA crosses the threshold of 2.8: roughly $8,000.
Crunching the numbers further, the authors estimated that an economic science degree, for those who simply barely satisfied the GPA requirement, boosted average salary from $37,000 to $59,000 — a deviation of $22,000. The results were similar for men ($21,700) and women ($22,600). All of this is in line with data for the entire U.S. in 2018, in which workers anile forty who held a degree in economics earned a median salary of $xc,000, while their peers who studied other social sciences made $65,000. (By comparison, any not-economics major earned a median bacon of $66,000.)
The economics gap
The difference in income is large enough that information technology is roughly similar to the earnings gap between those who go to college and those who do not. So, what explains the gap? Well-nigh one-half of it is chore related: Economics majors tend to take careers in business organization, finance, and real estate. Jobs in these professions often pay higher wages. But this effect also is tied to location. Economics majors get an early-career salary boost in California, simply this is not truthful in many other states.
In 2014, then-President Obama remarked that students tin make more coin if they avoided majoring in something like art history, a comment for which he was widely criticized. He also happened to be correct.
Source: https://bigthink.com/the-present/want-to-get-rich-major-in-economics/
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