It's hardly a secret to anyone who's worked in an economics department: some students enrol in economics because they want to study something that seems vaguely useful, but they don't have the grades, or the mathematics and language skills, to make it in business or engineering.
Economics programs typically have relatively few essay requirements, and require little by way of verbal skills. Relative to traditional arts and humanities subjects, the reading lists are short and manageable. The math gets challenging at more advanced levels, but most of undergraduate economics requires nothing more than high school level calculus. My third year course (open to non-majors) requires about grade 10 or 11 level algebra.
As a result, at most Canadian universities, economics attracts some students who are not strong academic performers (if they were, they were be in their first choice, business), and who don't have much intrinsic interest in economics. They just want a qualification that will help them to get a job.
At this time of year, while I'm marking final exams, I despair for them, yet I'm sympathetic to their plight. Is it so unreasonable for them to expect to get some useful, job related training at a university?
I'm attempting to teach the knowledge and skills that a person would need to analyze policy – to be an economic journalist, a policy analyst in government, to work at a think tank. It's job related training – but for a particular, highly specialized type of job. Why do markets fail? Do programs like the Working Income Tax Benefit increase work incentives? What are the impacts of introducing school voucher programs? How does Canada's equalization program change people's incentives to migrate between provinces, and impact economic efficiency?
Realistically, the students who are struggling to pass third year economics courses are never going to be policy analysts or economic journalists. So what am I teaching them that would help them in the job market?
I wouldn't hire someone in an office job unless they could write a memo relatively free from spelling and grammatical errors. But I don't teach spelling and grammar. Like just about everybody else in the university system, I figure that's not my job. If students want to improve their English skills, they have to pay for special English-language classes. (I could force people to improve their English by taking off marks for every single spelling or grammatical error, but this hardly seems like a way to help and nurture new Canadians and international students either).
I don't teach students anything that would help them to run a business – no accounting, nothing about hiring or firing workers, or human resource management. It's not that I think these things are unimportant – I am very glad that, back in the day, I took some courses in accounting, and would highly recommend them to anyone. But I can't teach accounting. Ironically, it is precisely those useful courses, the training type courses that would help a moderate student find a job working in a financial institution or small business, that students are being shut out of, because business schools have relatively high admission requirements and restricted enrolments.
My students want to learn about the macro economy, about what makes the economy grow, what makes businesses more profitable, what drives innovation. I teach mainstream microeconomics, which means I don't talk at all about the macroeconomy, or jobs and growth. Profits? In a competitive market, economic profits are equal to zero. Innovation? Technology is exogenous, outside the model.
Why not? Well, there is the problem of me being a micro person, but I could fake it. More seriously, there are two ways to talk about the macro implications of specific policy proposals. One is the simplistic "Increasing the size of the Canada Pension Plan Investment Fund increases savings which increases investment which grows the economy." Sure one can say these things – and it sounds great, and so convincing – but is there any evidence? Any sound theory? No. The other is the incredibly complex: "Increasing the size of the Canada Pension Plan Investment Fund would require increasing premiums, which might or might not crowd out private savings. And then there is the question of how the CPP investment fund is invested – can overseas investments, or investments in real estate, really be thought to grow the Canadian economy…" Then we're back to square one – material that just goes right over people's heads.
I called this post "The dirty secret of economics education". But, in fact, it's the dirty secret of post-secondary education more generally: we're teaching students what we want to teach. Sometimes that's what students want to learn. Sometimes it's not.
Worthwhile Canadian Initiative 
Reminds me of a Chinese undergrad at UChicago. I asked him why he was studying economics–what interested him. His response was that he owned high rises in China. I said, you mean your family? He said, I have my own now.
Conversation petered out. I don’t think he cared about anything I would call economics.
Donald – that’s really interesting about the e-texts and just how much students read.
Donald – that’s really interesting about the e-texts and just how much students read.
“The math gets challenging at more advanced levels, but most of undergraduate economics requires nothing more than high school level calculus… As a result, at most Canadian universities, economics attracts some students who are not strong academic performers…”
I think you may be underestimating the obstacle the mathematical requirements of econ pose, as compared to a field such as politics. There is also a difference between being able to do the math and wanting to. If many students want to avoid having to do calculus and matrix algebra – some them smart and able – this will tend to increase demand for fields such as politics. Depending on resources and how admission to plan / Major / department works, at the university, there could be situations in which a student wanted to be in politics because politics doesn’t require any math, but was only accepted into econ because he or she didn’t meet the GPA requirement for politics at the end of first year. Not a good situation, for that student. Is this possible, at Carleton?
Is engineering really so different in Canada vs the USA?
Yes, obviously job conditions in the US are far from perfect but the quality of opportunities available to particularly STEM graduates in the US is far beyond what is generally available in Canada.
Andrew “there could be situations in which a student wanted to be in politics because politics doesn’t require any math, but was only accepted into econ because he or she didn’t meet the GPA requirement for politics at the end of first year” – that situation arises most commonly with business or other more specialized degrees. I don’t think it arises with politics, and I couldn’t see anything in the calendar that suggested it would.
For the majority of university students there is no magic ticket. Most of them hope to get a great job, but there are no guaranteed paths to this objective. My suggestion, after graduating 20 years ago from Economics is to study and do what you love and let the jobs follow. I think learning to learn is a good skill to have, so is communication, analysis and leadership could be valuable skills to learn at university. An analysis course with Excel, SQL, R/SAS would help get a foot in the door.
I understand Frances concern for C/D students, they don’t have the stuff to be doctors, accountants, programmers, opticians and the don’t want to be in construction or the trades. I suggest that they limit themselves to a 3 year degree, perhaps move over to a college business program.
There are jobs that don’t need extensive university level studies and only some minimal specialized training for example business analysts, project managers, account managers, systems analysts, telecom analysts, etc …
I sympathise. When the rewards are reserved to the very top, those in the second or third rank cannot hope for much. I do wonder about the claim that economics offers some special insight into costs and benefits or the consideration of alternatives. It does offer a way of thought that lends itself to precise quantification of choices, but then that’s not terribly useful in a world where much that really counts cannot be quantified, and where an appreciation of the limits and pitfalls of quantification is essential. In the fields I worked in (intelligence, policy analysis, law enforcement) we came to prefer graduates in history or similar disciplines over economics – they were more likely to look at all the evidence, and be aware of the limits of knowledge (degrees in business were a marker for flashy superficiality). Still, most people seem to find a home that suits them eventually.
Even in the US, I’d say STEM is dicey in the long run. You don’t want to find yourself at 40+ years old having only ever done purely technical work. It’s a dead-end
You’re working from the view that the point of a university education is to educate.
Which is only half-true.
A university education filters society into graduates and non-graduates. And grades the graduates. It filters them by a measure of persistence, intelligence, and social class.
As an employer I find that extremely useful (not perfect – for example I find the social class bit a tad annoying – but there are employers like law firms who find that useful). The fact that you’ve also taught them some stuff – well, it’s a nice bonus if they’ve learned something relevant.
For the reasons listed here, (and the realization that most students in Korea attend university solely as a signalling exercise – ending up in a prisoner’s dilemma…) of the six courses I have to teach every year, I made sure that one of the classes each semester consists of reading the newspapers, giving presentations and writing papers (though dressed up as an economics course). However, there’s always a few students every semester who complain that “they don’t learn anything…”
And here I thought I got a bad education in MEPhI Economic Analysis Department. I’ve learned, let’s see:
Calculus, linear algebra, analytical geometry, discreet mathematics, combinatorics, graphs, stochastic theory, statistics, basics of algorithms, a few simple programming languages, theory of databases, mathematical modeling (on paper and using tools), ODEs, system dynamics software, undergrad-level micro, Neo-Keynesian macro (the teacher was cool but kinda behind the times… I like Post-Keynesian school more now), accounting, financial management, history of sociology, history of economics, economical history, political history, history of philosophy, theory of politics, BPM, ERP systems, MS Office.
Alright, most of those courses weren’t very deep, and I’m starting to forger some of the least useful things I’ve learned, but I’ve certainly touched a lot of topics. Compared to some Western student I am a jack-of-all trades (but master of a relatively few). I used to envy the fact that American/European students of economics learned a lot of models and read a ton of books on the subject, but now I think that perhaps it is better to get a wide, if shallow, education that will show you what is -there- to learn and then to deepen it in the necessary areas in the process of working.
I currently work in IT consulting, and reading about economics is just one of my hobbies. I hope to grind through the Mas-Colell textbook one day, just for the hell of it, even if that won’t be particularly useful in future.
I have not experience with Canadian education, however I really do not think that you should be that much worried. My wife is an attorney and according to her she learned nothing of really practical value as part of here law education. She was thought history, theory of law or Roman law – but all this is all not really that much useful in practice, especially if you end up doing just a firm lawyer running through labor contracts and devising internal company rules. The few courses where they were really required to write a contract or practice speeches before judge/jury were to far in between to have any significant impact on real skills. Most of those came as part of apprenticeship.
Another example is me – I am compscience major and I had an intensive math/physics courses as part of my education. We did some programming courses – a little bit of everything, from assembly language and C++ through some scripting, object-oriented programing and some web programming + databases. It is almost impossible that you will find a job where you will be able to use all that. If you really are to find a job, your programming skills (as they are taught on university) in a particular area are not vastly superior to any high school student who did a few programming jobs in that area to make some money aside. It is all that math and physics and theory that made you ask questions existence of which you were not aware, that make you different. All that, if used correctly can make you use your practical skills more efficiently. So to sum it up, I think that university education really does not have to prepare anyone for any particular job. The best they can do for your average student is to let him taste different things, make him ask questions that he would not ask if let on self-education and then let him loose. World is changing, people are more likely to do more things during their life and to educate until they die. I really believe that education should prepare you for this more than it should prepare you to use a particular tool for a particular job that is popular nowadays.
And last – but not least – truth to be told I really do not get this notion that education is there solely to help you make more money. There is huge value in being educated that goes beyond what you personally will really “use” in your life. If you were taught to think in some special way, if you use different categories to evaluate world around you, if you practiced critical thinking for almost 20 years then it becomes part of your personality, of what person you really are. These are things that make you more valuable not just by sheer amount of work you personally can do, but it increases your value for your colleagues, friends and other people around you.
The main issue with an university education is that expectations aren’t aligned.
Students expect to learn stuff that will be useful to their future jobs. Some of the most clued up students may also expect to gain useful perspective, and make useful contacts, but as far as I can tell, not many people are that aware of those possibilities at the age that they enrol in University. They often don’t realise how little of what they will study at University will be useful at work, and even if they have some inkling of that, they still usually expect that academic performance will be highly valued by employers. Which it often is, as one of their criteria. But only one.
Students’ parents (an important part in this since most students are young and still to some extent dependent on their parents) have similar expectations, plus expectations of sending some social signals. They often have some old-fashioned ideas about what going to college means, since (by definition) they belong to another generation. But being older, they usually assume they know better than their children, when in actual fact, they’re usually equally uninformed.
Lecturers expect to teach about their chosen subject. Which may or may not be that relevant to student needs. And they often have little idea of what the student needs are anyway, unless they happen to be particularly interested to know.
Employers expect to hire people, not based on their knowledge, which most likely won’t be particularly relevant, but based on some useful signals that indicate how intelligent, committed (both generally and particularly to the job subject) and/or well connected a graduate is. They often assume that they understand these signals. In actual fact, since they don’t employ people who give off the “wrong” signals, they don’t get to know.
In short, it’s a highly inefficient system that operates because everybody holds mostly unrealistic expectations.
If students realised how little they are going to get of value, and the fact that the most useful resources of an University can be accessed either for free or at a very small fraction of the cost of a University education, they would choose the latter path. If parents had a similar understanding, they would go along with this instead of pressuring their kids to go to college.
If lecturers realised how little value they usually contribute to students, they’d be seriously re-thinking the whole role of Universities, and trying to work out what it is that they can offer to society (Useful research? A mix of Internet-based education plus personalized advice? Not sure, but certainly not lectures.)
If employers realised how much noise and how little signal they are getting when they classify potential employees, they would start demanding systems that provided them with better signals. I suspect a combination of IQ test, social skills test, English language test, and a two-week hands-on getting them to know the job in real life for those that passed the tests would be far more useful to estimate the ability for most jobs.
But then, if we had an efficient system, unemployment figures would go through the roof because there wouldn’t be all those people stuck doing University degrees. Which is politically unacceptable.
The primary purpose of a university education is signaling. A credential tells the employer that the candidate has the combination of intelligence and work ethics needed to get a degree. With the exception of a few professional fields, the actual material they study is not really relevant.
My firm only hires university graduates. If a resume comes in without a degree in it, it will usually end up in the trash. This is true for sales positions, HR positions, and all sorts of posts where no degree program directly teaches the knowledge these jobs require. It just is taken as a signal of the applicant’s quality.
There is frequently grumbling that the taxpayer is paying for a highly expensive tertiary educattion system just to give the private sector a resume prescreener. But what alternative is there that is better? How, really, can you distinguish one 18-year-old from another?
Interesting comments.
For my thoughts on education as a signal v. human capital theories of education, and what it means from a policy perspective, please see this post – my first on WCI: http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/03/human-capital-literal-truth-fairy-tale-or-myth.html.
(B.t.w., Nick or Steve, could you change the category tag on that post from Nick to me?)
Hmmm. I have changed the tag to “Frances Woolley”, but it still has “posted by Nick Rowe”.
Nick – thanks so much! Now if someone clicks on posts by author, this will show up under my name not yours.
J.V. Dubois:
I disagree strongly. Yes, a CS degree gives you very broad education about the field, so you won’t directly use most of it. But you don’t know what you will be doing at graduation until you do – web design, OS programming, etc. – and so the breadth really is useful. No one goes into university knowing that they will end up working on the NT kernel (some may hope), so it’s pretty good that those that do had to take an OS class.
I also disagree re: relative superiority. A CS major has probably done some number of CS courses in high school; by graduation they have about 6-8 years of intensive programming experience in a wide variety of settings. This gives you really excellent priors about what can and can’t be done and how to do it, in any language. Post-graduation, a lot of my programming is actually in VBA, which I had done none of in college – but I can learn almost anything I need to about it instantly, because I know what sort of things to look for in the documentation if I need to accomplish a certain task.
My undergrad major in Sociology was far more practical and useful than my econ courses, in part because almost all my econ professors avoided using real world examples (widgets, utils, and coconuts are far less messy). The impression I get is that an econ degree is mostly useful as a signal. It shows you are a practical, business-minded person who can do math and is willing to sit through numerous boring classes in hope of a future reward.
It’s pretty rare that one will learn anything in undergrad that is immediately useful. Even with my more “practical” major, if was ultimately side/summer programming work that got me into a job once I graduated.
Eric – what country was that in?
“…we spend a huge amount of time talking about market failures, about the role of government intervention in the economy, about public choice, interest groups, rent-seeking, bureaucracy, etc etc etc.”
Frances, can you recommend any interesting economics articles that deal with bureaucracy?
Thanks
“Is it correct that in the 1950’s and 1960’s in Canada (maybe the US too?) business was the easy program to get into? That it only became fashionable in the late 1970’s/80’s?”
Yes, I think so. I recall my father telling me that when he was at McGill in the late 50s early 60s, business and, believe it or not, engineering were known as the less demanding fields.
Matthew – classic references are Niskanen, Bureaucracy and Representative Government (that’s the theory I do in class), or Mancus Olsen, The Logic of Collective Action. For something recent and academic, take a look at the journal Public Choice. Also some cross-dressing economists publish in the American Political Science Review or the Canadian Journal of Economics.
no accounting, nothing about hiring or firing workers, or human resource management.
Only one of those is actually useful, I think. The rest just rely on hip voodoo-of-the-week and badly flawed heuristics.
Vaguely reminiscent of your “purple pill” desire from your post about behavioral economics, it’d be nice if there were some blend of economics and, say, business or finance curricula, but not simply what you would get if you double majored. Economics can leave one without obviously marketable skills – at least, not obvious to the HR departments and middle managers – but the narrow and frequently bizarre focus of business and finance leaves many otherwise bright people with deeply wacky ideas. For example, the prevalence of “Austrian” ideas among finance professionals.
It’s an incredibly sketchy notions on my part, but take your typical economics and finance curricula. Emphasize econometrics, (applied) behavioral economics and/or economic psychology, some elements of industrial organization and the parts of finance that aren’t terrible shibboleths (use discretion – I don’t feel like a smarter person or investor for knowing CAPM, but I do for getting Modigliani-Miller). What else…maybe business law? It’d give graduates the practical, nuts-and-bolts knowledge of business so they can swim with the fishes, but technical knowledge that your typical business majors completely lack – knowledge that lets them assess and critique data and business schemes in a way virtually no one out of an undergraduate business school can. Call the major “business physics” or “social physics” or something, because that will pique the interest of the masses and irk virtually everyone in business and the natural sciences.
Edmund – the kind of curriculum you describe would be hugely popular.
I don’t understand this critique.
I have a MS in Engineering and took Advanced Calculus.
But, this guy, http://en.wikipedia.org/wiki/Dale_W._Jorgenson, made my head hurt with statistics and matrix algebra.
I think Eco is tough.
Edmund has a point.
You ve got to have the “physics” in the word. People know that the nukes work, but dont hit them at home, like chemistry : – ).
Econophysics is already taken.
Nano, opto, bio,
community, governance, network, fractal, global, holistic
combined with :
advanced, interdisciplinary, something with string, soft, sigma, viral, native
I think “entrepreneurial” is too long and overused already
Alex: Ok, so take your average University major who spent 5 years learning math and physics, then some years learning all that theory, and who maybe tested some of his practical programming skills on a few university projects. And compare him with somebody who took a job directly from high school and who now has 5 years experience in a technology startup or who has several projects under his belt working as part of some larger development team. Now compare their marketable “programing” skills. If you end up programming .NET applications you really do not need to know all that math, physics and skills to make a program in assembler.
Oh and yes, please take into account that we are talking about your average guy – we assume 30% of people have university education. We are not talking about the brightest geniuses who are snatched from university by Google or Microsoft to design next gen operating systems and whatnot.
“Even in the US, I’d say STEM is dicey in the long run.”
Yeah I’d agree, finance is much better these days but I think there’s a lot of confusing engineering in general with coding. For the reasons JV Dubois highlights above programming is a bad profession in general, namely someone who just learns to program themselves can get a job coding without any credential. This means that unlike with professions like law, medicine, and professional engineering there’s no legal protections to help shelter you from competition which means most programmers are open to full market forces and hence all but the best can look forward to lower wages as they age.
STEM isn’t the most lucrative field to be in these days but if you’re in a STEM field you’ll have much more luck looking for work in the USA than in Canada, especially for new grads.
I was a math major until until 2’d year university, my experience is that math, much like a language is understandable until it isn’t. My barrier was admittedly low – I could barely understand 2’nd order differential calculus and third order was beyond me. I switched to economics and computer science and found even more math: matrix multiplication, non-stochastic algebra, formal logic and statistics. My economic faculty was divided between monetarists and communists – my later econ classes were shall we say very different. Coming out in the mid-80’s I looked at my prospects working at a major bank (the only ones hiring economists) or working with other sweaty nerds programming in COBOL, PL1 or C and took the LSATs instead. As a lawyer I can say that my economics training developed my understanding that social systems such as the justice system, business and yes economics are complex with no right or wrong answers (like in mathematics) but only better or worse answers. Economics, in normalizing one or more variables (read assumptions) and conducting thought experiments using various logically derived models to estimate results (statistics again) is a valuable tool in my work and other predictive trades. It is not just a liberal arts degree that teaches one to think critically. The current fetish of downloading training by businesses onto Universities is in my humble opinion very destructive.
(Yes, I graduated from a glorified trade school)
Overdue @Robillard:
I recently came across this gem, a letter from Adam Smith on giving universities a monopoly to grant medical degrees. It has wider application, to be sure.
http://www.historyofscience.com/articles/smith-medical-education.php
@Edmund, @Sproul and @Titus:
I have worked in national statistics, plus done some accounting and investing. I majored in economics (at Carleton, after dropping down from combined Economics and Math ), and later studied some accounting, statistics, and finance.
From this standpoint, I think teaching the value of using and interpreting economic indicators is quite useful, including Y=C+I+G+(X-M).
Giving practical advice on how accounting statements relate to national accounts and financial models is something that appears to fall between the cracks, and I suggest that economics would be a good home for that (professors of economics will no doubt back me up).
And somewhat on a side-note, I’ve been pondering lately how is it that so many of the social workers that I’ve met are, shall we say, less than financially literate. One would think that financial woes would be at the root of much of their clients’ needs, and that financial literacy (or even economic thinking) might be a key item to have in their tool-kit. Just a casual observation, no slight intended.
Nice post, and great discussion.
I think American data on the salaries if different undergraduate degrees is interesting. The Payscale College report only includes individuals with undergraduate degrees. When you rank them by midcareer salary, economics does better than any undergraduate business degree. Even when ranked by starting salary, economics does better than most (I am looking at the 2011-2012 report).
As an economist currently working in a business school, I can understand why this is. Business courses seem to concentrate on specific job skills. Many of these skills will become dated after students graduate. For example, the person who teaching the accounting course in taxation here works very hard to keep it up to date with changes in tax policies. That is admirable. However, I wonder if it matters given there will be further changes before students graduate.
I think that economics students end up doing better because they learn how to learn which in the end is much more valuable that most general business skills.
BTW, both my experience and that of the business professors here is that those majoring in economics (as a major in a business faculty) are on average much better than those majoring in business subjects.
Jamie – thanks for those comments. The point about financial literacy and social work is an interesting one.
Derek – with all of these stats, it’s vital to control for, e.g., the gender composition of the college major. If women’s incomes are on average 70% of men’s incomes for reasons completely unrelated to field of study, then a 100% female field of study will generate earnings 70% of those of a 100% male field of study. Are the earnings of econ majors relatively high becomes econ imparts valuable human capital or sends a strong positive signal, or because econ is more male-dominated than other social sciences?
Frances: Are economics undergraduate programs, more male dominant than areas like finance? I don’t have statistics handy but I doubt it and economic majors have higher midcareer salaries than finance majors (although only slightly higher starting salaries).
As far as human capital versus signaling, I can really see how both could be working. However, the fact that economics does much better in terms of comparing midcareer salaries rather than starting salaries makes me suspect that human capital is at work. If it were all signaling, I would think it would be reflected in starting salaries.
JV:
I agree physics is not going to be useful, but your course of study was also unusual; most CS degrees only require intro physics as part of their general education requirement.
If I compare my own undergrad experience (and that of my classmates) with your hypothetical person, we would have a large advantage over that person because of the breadth of ideas we’d been exposed to. There are a million wheels in software design and development that you don’t have to reinvent if you know they exist and can look them up.
A simple example: memoization (more generally, caching). An application I developed at the office was running slowly, so I just added a hashtable and slapped a few lines at the front of the offending functions (which I knew were idempotent) and bam, requests were handled 400% faster.
I’m perfectly open to the idea that there are margins on which someone should forgo a university CS education and instead go straight into programming, but I think they are much further out than you seem to. The world isn’t divided into “Microsoft programmers” and “everyone else”; software systems are used everywhere to do everything, and the toolkit you get from a university degree lets you make better systems with less effort.
@ Frances: “It’s hardly a secret to anyone who’s worked in an economics department: some students enrol in economics because they want to study something that seems vaguely useful, but they don’t have the grades, or the mathematics and language skills, to make it in business or engineering. ”
I whole heartily disagree with the entire premise of this blog post! To suggest that an education in economics is easier to complete than business school is complete hogwash! Ask any number of my colleagues currently studying for their M.A. in Economics today! Many of them have undergraduate degrees in economics, some humanities, while some other have B.Comms. Throughout my experience in networking with them, and other students over the years, the conclusion has been overwhelmingly similar: the B.Comm is an un-stimulating degree, business school is for the ‘brainless’, it’s ‘boring’, ‘simple’, ‘unchallenging’, and requires nothing but tactics in short term memorization which does nothing to challenge a critically minded person!
I was enrolled in business before I switched to Classics/Economics/Philosophy, and I can tell you that at least at Carleton, the business college offers nothing in comparison to the Economics department!
With respect to the ‘skills’ one learns in throughout a B.Comm, I highly encourage anyone here to speak to any 4th year undergraduate pursuing the B.Comm in Ontario. I happen to know a few of them (ok sample size of only about 15), and the majority of them tell me they could have learned the material faster on their own, with better clarity/understanding, without the expense of tens of thousands of dollars… From what I understand, many of their courses are literally just “read the book” “write the exam” pay as you go credits! That is not an education one wishes to start a life on… is it?
I’ll cut the rant for now… but just as parting consideration, ask your average B.Comm student what his/her hardest class is throughout their degree. In my experience it has always been one of the following: Intermediate Micro/Macroeconomic theory, Introduction to Statistics with application to Economics and Business…
Scott – I agree with much of what you say, e.g. that intermediate micro is a brutally hard course for many business students, and that economics offers many more opportunities for rigorous, deductive reasoning than business.
I disagree with your conclusion, however, for two reasons.
First, in many Canadian universities, business has tougher admission requirements than does economics, and requires a higher GPA to continue in the program. Higher admission requirements + some element of training = signal + human capital = better prospect of a job=strong demand for program = higher admission requirements. The virtuous circle. That’s what drives the phenomenon I’m observing here, not the intrinsic difficulty of business.
Second, the really weak students in undergraduate econ classes typically have very poor language skills. They come into economics to avoid having to write essays and or do presentations or participate in class – the elements of business classes that are “birdy” for someone who has reasonable language skills. A class presentation can be an absolutely brutal, utterly terrifying experience for someone who’s not grown up in Canada. In Carleton, the weakest students typically take applied econ or 3 year degrees. Remember that often only 1/2 or 2/3 of students at most come to class. You might not ever have met any of these struggling students.
Your post really hits home with me —
I started in economics mainly because of the financial crisis; I was a political science major at the time and my professors couldn’t make sense of the crisis. Everything they said seemed like a secondary observation: “this is what happens when Congress bows to special interests like finance,” or “this is a great exercise in how legislation can quickly be passed through in times of crisis.”
I wanted to learn about the crisis itself and thought taking economics courses would help. Yet when I got to class, we were learning the same old textbook theory — and very little of it involved higher-level maths. I was quite happy with myself until I took Game Theory — I finished with a C+, devastated that I couldn’t make sense of the course.
I picked up a mathematics major thinking that might help; after all, the people who excelled in Game Theory tended to have been Math / Statistics majors taking economics for fun. My mathematics grades were all over the place, finishing with a B+ average overall. But despite being at least proficient in math, I was never able to apply that skill set to economics. I even tried to take courses that would matter: advanced linear algebra, advanced probability and statistics, calculus 4, etc.
The result has been taking a job far from my core interests and outside of the ‘skills’ that I developed as an undergraduate. I kind of feel like I was defrauded by the economics department — I received too little by way of economic maths/modelling to pursue that field, and too little in business training to fit the finance mold. So what now?
From what I understand econ professors think what they teach their undergraduates is mostly bullshit. Is that true for any other major?
Paul Heyne was popular teacher, but his economics was just the usual dumbed-down libertarian junk. People (including me before I knew better) lap it up because it’s easy to learn and makes you feel smart. It’s like how people trick children into paying attention by pretending what they’re saying is a secret.
That is also not my experience with economics (in the US). In my math major I only had to take tests. My humanities major friends only had to write final term papers. In my economics classes I had to do both in almost every class. People who couldn’t handle the math in economics classes (and there were many since we didn’t have a business major) dropped out and became political science majors instead.
At most schools I know of that have both economics and business majors, the business major is the creampuff major and the econ major is tough. I know of a few exceptions with exceptional business schools, but those are exceptions.
“If I were an economics student, I would be in a state of academic- existentialism after reading this. Its more depressing than gender and population aging to the average 20something- jobsearching-almost graduated-econ undergrad.”
This is way after the fact, but I’m a current econ student and I don’t really care. Well, care isn’t really the right word, but I knew about this when I applied. I’m not going to learn a lot of useful job-related things, I’m not going to learn how to run a business or whatever, I’m going to learn economics. I’m going to learn about how markets work, I’m going to learn about monetary theory, I’m going to learn about hyperinflations. None of these things will really help me and a job, but I’m fine with that. I like economics, plain and simple. After lugging myself through a year and a bit of pre-med I finally just decided to do something I actually care about.
I know I’m not really the kind of student you’re talking about in this post, but I thought I’d just offer my two cents. ;]
Canadian Nerdo – wonderful – this is a perfect spirit with which to approach an econ degree. I wish you all the best with your studies.
Personally I think that one of the worst things to happen to higher education is the “partitioning” of knowledge. One reason I have a strong interest in economics is that I like asking questions like “so why does that happen?” and once you view the world through an economic lens, you start to see interesting things. Like analyzing the economics of college majors and job interviews. Once thing that sort of became pretty obvious to me once I thought of things in economic terms was that it was a horrible idea to focus on a major, because the dynamics of education practically insures that you end up in a major that is oversubscribed, so I focused on general liberal arts skills. I ended up with a Ph.D. in astrophysics, because that turns out to be the hardest subject I could find, and I’m something of an intellectual masochist.
One thing that is interesting is that I have an incredible amount of impatience with formal economic models. The thing that I find most useful is economic history and also sociology and psychology.
Since we are talking dirty secrets…..
It’s also been useful in job interviews, and analyzing the job market, and it doesn’t look good. There are basically two types of jobs in finance. Those that require high level technical skills, and those that don’t. For ones that require high level technical skills, there is a strong bias in financial firms against economics majors. People are looking for people with mathematics, physics, computer science, and engineering degrees. The presumption is that a physics major or a CS major is just better at math than an economics major, and if you have a supercomputer than handles billions of dollars in transactions each day, you want (and can pay for) world class geeks.
That leaves those that don’t require technical skills. The good news is that there are a ton of them. The bad news is that financial firms tend to look for those from “name brand” universities. One thing that I find amazing is how much people will pay for “name brands” and that includes people as well as cell phones. Part of that is risk aversion. Part of it is a sales channel. A lot of it has to do with brand transference. The dirty secret of finance is that much of it is clerical. Type in numbers into a spreadsheet. Photocopy these reports. Summarize these findings. They actually don’t require that much skill. But it looks better for a company to tell their clients that their janitors and plumbers all have Harvard MBA’s.
One bit of advice is not to focus too much on the classroom. When it comes to jobs, it’s not what you know. It’s who you know. If you want to improve student’s job prospect you need to improve career services. Set up your career services to “sell” your students to companies the way that people sell refrigerators or used cars. When people want a cell phone they go to the Apple Store or local big box retailer. When big companies need people, they go a university, and often a “big name” one. Also keep track of your alumni. Find out what they are doing and keep them involved in the school so that they are your “inside agents.”
The other thing that I fought is that my self-study of economics was extremely useful in getting a job. The job market is a market. If you really understand how markets work, then you should be able to figure out how to make the job market work for you. When I was writing a resume, I was thinking in terms of transaction costs, information asymmetry, and signaling, and as I was interviewing I was learning more about the type of market I was in. Grade and credential inflation is a type of inflation. Trying to figure out what to study is an exercise in portfolio management. Even reading about hyperinflation and the great depression was useful. Learning how people survived was pretty useful, and I was thinking to myself “well at least I didn’t live in X location at Y time.”
One curious thing is that I ended up with a major admiration for Karl Marx, and I’m pretty much a dyed in the wool Marxist. The thing that Marx got right was that the rich get richer and the poor get poorer, and one of the most important insights that Marx made was that capital is not really about money. It’s about social relationships. Once your realize that, then a lot of what goes on in a job interview makes sense.
The main reason that employers like university degrees is that a university degree shows that the graduate has some of the real skills that the employer really cares about. Namely the ability to take orders, respect authority, follow schedules, control emotions, and carry out tasks that you think are stupid. If you have a bachelors degree it means that you can function in a bureaucratic office environment, which is not true for a lot of people.
The test that you too might be useless. The class may be garbage. But the fact is that you were willing and able to jump through the hoops, and do complete tasks even if you personally thought they were useless and idiotic. When the professor tells you to talk, you talk. When the professor tells you to shut up, you shut up. This is exactly what people want in a corporate environment, and universities took over this socialization function from the military sometime in the 1960’s.
One other function of the university is “young adult day care.” Universities are places where 20 year olds can learn about alcohol, relationships and other things in an environment were a mistake isn’t fatal.