Study economics or finance?

[young mustachian]

Hi there fellow mustachians. Young newbie here. I have a question about the very foundation of my career: education. (For the shrot version, see below)

I'm currently studying applied economics at a European university. Next year I'll do my master's year (which is the final year here in Europe). However, during these past few years I've grown quite interested in macroeconomics. The economics courses I've had in my current education were very interesting, and I'm also intrgued in it because of the whole european debt and economic crisis.

In my final year I have to choose what I'll graduate/specialise in. I was planning to go with finance. Now, my university no longer offers an economics degree (only applied economics). They do however have a graduate course of economic analysis within the applied economics discipline. However, I've looked into the courses offered in that specialisation and they aren't spectacular: things like international trade and (micro)economic analysis of an organisation.
At my university I asked if I could complete with graduates who actually studied economics to finad a job. They told me graduates in this specialisation do find macroeconomic jobs, because there aren't many economists who graduate in my country, because you can write a macroeconomic thesis and because individual skills are also very important. However, I find that a very weak defence.

I've looked into a master's decree in economics at another university. The downside is that this course is harder, and I'll have to follow a preporatory programme (with lots of maths) which means I won't be able to graduate in one year (mind you, I started my studies late because I did not know what to do when I was 18; I turned 25 a few weeks ago). But they offer much more interesting (advanced) macro and microeconmic courses, several econometric courses and things like economic policy, budgettary policy, bayesian statistics, and so on.

So I'm basically more interested in macroeconomics, but I still find finance interesting. Any suggestions? Also, will I earn more money as a financial economist or a macroeconomist? And, won't automation make the jobs in finance unnecessary?

In short: Wanted to do finance, but I've grown more interested in macroeconomics. My university however doesn't offer a decent economics discipline, only some courses.

Study finance:
+ Graduate in one year
- A bit less interesting than macroeconomics
- Fear of automation

Study economics at my current university, within the applied economics field:
+ Graduate in one year
- Not as in-depth as an actual economics degree, will I be able to compete with other economists?

Study economics at another university:
+ Most interesting option, also offers financial courses in a more macroeconomic environment
- Will take 2 years
- It'll be much harder than the other 2 options, might fail at the more sophisticad maths.

Sorry if my English is a bit blurry, I'd really appreciate your help!

[GemJedi]

I studied economics and developed a great fondness for macroeconomics as well. I received a BSBA in Economics and have never regretted it. But there are very jobs in macroeconomics. Anyways the fun is just being able to see the workings of the world from the very important view of money and how people interact with it. You have your whole life to enjoy a view most people don't have.

That being said, finance offers more job opportunity because it is more skills based.

You could also consider a law degree. There your economics can prove useful such as in what I practice, insurance claims.

[young mustachian]

Thanks for the reply!

I never really worried about a job in macroeconomics, because there are very few people who study it in my country. Almost everyone gets a degree in applied economics. I think 10 % might be studying economics, but it could be lower.
Still, you might raise a point there.

Insurance is actually the part that interests me the least in finance. I'm more interested in investing: stocks, bonds etc.

[Retire-Canada]

I'd score each option on the following criteria:

1. enjoyment/interest [1-10] 10 = most enjoyment

2. Risk/Extra Time Req'd [1-10] 10 = lowest risk/least time req'd

3. Employability/Earning Potential [1-10] 10 = easiest employment/best jobs/highest pay

Rank each option based on  1 x 2 x 3 for a score from 1 - 1000.

Use that to guide you.

-- Vik

[Capsu78]

Economics is for those that don't have the personalities to become accountants...

(Sorry, old college joke we Liberal Arts majors used to fling at the finance majors when they would show up with job offers 3 months before graduation!)

[BBub]

I majored in Finance/ minored in Economics.  My wife majored in Macroeconomics w/ a masters in Applied Economics.  We're in the US, so our experience may not relate exactly to your situation..

First, do what you think you'll enjoy.  You can make plenty of money either way - especially if you implement the MMM philosophy early on... 

Finance: If you like the stock, bond, investing route - go with finance & get a job with a money manager.  I know you fear automation, but IMO, capital management aint going away.  The whole EMH debate has raged on since the 60's, and now it's morphed into an active vs. passive debate with computers & algorithms coming into the mix.  These days the EMH camp definitely has the momentum, but the market has gone straight up for the last 5 or 6 yrs.  Give it another good recession and people will again proclaim "Buy & Hold is dead!!".  Maybe not most ppl on this forum, who tend to be quite educated on the subject, but most ppl will.  Just wait.  These things move in cycles.  Furthermore, the bulk of institutional money, sovereign wealth and hnw individual wealth is not in the vanguard 500 fund.  It's spread out among holdings in private placement funds, lp's, equity, real estate, debt instruments, etc, etc, etc.   If you want to get into finance & investing, opportunity abounds. Don't let that be a concern.  Of course, with a finance degree you aren't just limited to money management.  You could get into consulting, M&A's, capital markets/investment banking... many other opportunities.

Applied Economics:  You will have no trouble finding a job today with this major.  Basically every corporation and government in the world is building out a team of millennials proficient with Excel, SAS, or some equivalent program to analyze data, make projections & forecast.  Opportunity for advancement may not be quite as strong.  I.E. you probably won't get "rich" doing this.  But the starting salaries are among the highest around, and you'll have job security at least for the foreseeable future. 

MacroEconomics: A very interesting subject, but outside of academics, I don't see many job opportunities directly related to this field.  You say there are very few in your country - there's probably a reason for that.  I suppose all of the major banks have a chief economist & a team of analysts, but the odds of landing a gig like that straight out of grad school could be low.  You may be able to find a government job, but again, it's hard to place value on simply having a bunch of knowledge about various economic theories and principles.  There definitely is value in having that knowledge, but the jury's out on whether the job market will adequately compensate you.  With this major, the surest path would be to become a professor - good quality of life, good pay, lower stress.

Hope this perspective helps.

[misschedda]

I studied Economics in college and went into the data/programming side of things after I graduated (I guess that's applied economics). I can only speak for the U.S., but here it's uncommon for people to get Econ jobs with only an undergraduate degree. People who really want to be "economists" have to get a PhD, which involves a significant amount of advanced math. Since you don't seem very interested in math, I'd consider that when thinking about where to go from here.

[young mustachian]

Yiou guys raise some valid points there. I'm not really sure if I want to become a professor, I might not be asseve enough to face a bunch of 18-25 year olds.

I could always do finance now and when I graduate, combine working with studying macroeconomics.

[El Gringo]

I studied Economics in college and went into the data/programming side of things after I graduated (I guess that's applied economics). I can only speak for the U.S., but here it's uncommon for people to get Econ jobs with only an undergraduate degree. People who really want to be "economists" have to get a PhD, which involves a significant amount of advanced math. Since you don't seem very interested in math, I'd consider that when thinking about where to go from here.

Can I ask you what you do/where you work? I'm in DC and thinking about studying economics. Feel free to PM me if you'd like to have the discussion more privately.

[young mustachian]

I studied Economics in college and went into the data/programming side of things after I graduated (I guess that's applied economics). I can only speak for the U.S., but here it's uncommon for people to get Econ jobs with only an undergraduate degree. People who really want to be "economists" have to get a PhD, which involves a significant amount of advanced math. Since you don't seem very interested in math, I'd consider that when thinking about where to go from here.

Can I ask you what you do/where you work? I'm in DC and thinking about studying economics. Feel free to PM me if you'd like to have the discussion more privately.

I'd like to add: did you do a phd?

[zkate]

I vote for finance. I am biased however, I have an M.S. in Finance and my husband has a PhD (he is a tenured professor). What is it that you want to do for work and which degree will get you there?

[young mustachian]

Well, being a macroeconomist has been in my head for a while. Working at the central bank, ECB or the European commssion...

If I decide to do finance, Investment/stock advisor seems like a nice start, and I could work my way up to a financial analyst or stock exchange specialist.

[zkate]

Well in the US, if I wanted to go work for the World Bank, the IMF or the Federal Reserve, I wouldnt get a masters in econ or finance, I would get an SAIS (school of advanced international studies) degree from Johns Hopkins.

I am with others on this forum who have said, unless you have a PhD, it is really hard to be an "economist". Do you have any interest in programming? Even in finance it seems more and more companies want some programming, the ability to gather & analyze large data sets, etc.

Straight out of a masters degree, I worked as a financial analyst for a VC firm. I just happened to be at the right place at the right time.

Here, a degree in finance is in no way necessary to be a financial advisor you will need to register with the SEC and perhaps get a certificate of financial planning (take a test) along with the proper requirements to trade stock (series 65) & sell insurance. But a masters degree isn't necessary for that at all. It may be different in your country. It also is no way a stepping stone to working as a financial analyst for a company.

Full disclosure, I am not much older than you. Barely 30. I kind of feel bad trying to give advice =/

[retired?]

What do you want to do?  I didn't read it all.

Has a big impact.  Also, if you are considering econ and finance, my guess is that the branch of finance you are considering is financial economics, which resides in B-schools for the better universities.

I think it depends greatly on what you want to do, but what level are you considering?  Phd or Masters?

In the U.S. it is rare for someone to obtain a masters in econ unless it is a "failed" attempt at a Phd.  i.e. people do not enter econ programs with the intention of earning a masters, but sometimes leave a Phd program for various reasons. 

But, there are some "applied econ" programs. 

Sounds like you do not want to do the MBA track.  There are some schools that do a MS in finance, but those are mostly business oriented.

[young mustachian]

Honestly, I'm not exactly sure what I want to do. I'm interested in finance and macroeconomics, so something in those fields. Its'really vague, I know :(

Here in Belgium, you can either get a degree in applied economics (typical majors are audit, marketing and finance, but this varies between universities) or a degree in economics with majors financial economics, economic policy and economics research. People who want to get a phd are strongly advised to choose the research major (for applied economics there is no preferred choice). This major offers some advanced econom(etr)ics courses.

Getting a master's degree is primary goal here. Only a minority, the top notch students, get a phd if they're interested. But I agree that the most ambitious economics students do get a phd.

Edit: there are some more specialised master after master degrees. But these are usually degrees that people who choose not to get a phd get, and they aren't all that popular. THere are also some private schools that offer advanced masters, but these are very expensive and very, very few get these degrees.

[Indexer]

Why not do a major in econ, and a minor in finance?  Most of the classes overlap anyway.

Options:
- If you decide to get your PHD in Econ you can still do it.
- A major in econ and a minor in finance with good grades(3.5 GPA is a great start) will get you an interview at any investment firm. 
- If you want to go the financial planner route you get an entry level position and then you get a CFP after you have some experience. 
- If you want to go the analyst route they have entry level positions and then you get the CFA after you have some experience.
(A CFP or CFA will probably have a bigger payoff than a PHD in Finance.) 

- If you find you like Econ more you can try to get a job with a central bank.  I'm not as familiar with that career route, but I would imagine a PHD actually is worth something there.

If I decide to do finance, Investment/stock advisor seems like a nice start, and I could work my way up to a financial analyst or stock exchange specialist.

That's not really the career ladder there.  An advisor requires more people skills and personal finance.  An analyst has more math/econ and corporate finance.  I'm not even sure if a specialist is really a job anymore.  The NYSE is more of a museum than a trade floor now.  Everything happens electronically.  You could also come right out of college and get a job as an advisor or an analyst.  Of course the advisor/analyst jobs you actually 'want' will require more experience and you will have to work towards those in addition to getting your CFA or CFP or both.  I have friends who got analyst jobs right out of college, worked 60hrs a week for a couple years, and now they are senior analysts.  I also have friends who got client facing jobs with investment firms who are now financial planners.  Both careers are rewarding.  The biggest difference is the analyst will spend more time analyzing numbers, and the advisor will spend more time talking to clients and building financial plans.

[retired?]

Do you have the math background to do quant finance?  Very interesting math and finance-wise and can pay very well.  It's the route I took, but starting from an interest/aptitude in math.

It's a tough call b/c if you were looking at undergrad and in U.S. my recommendation would be clear - econ....undergrad finance programs are fluff in the U.S.

If you were in the U.S. and looking at graduate level for going into industry, it would also be clear - finance, and as applied as possible, i.e. so you can solve real problems.

I agree with Indexer's comment on career path.  But, the programs you are looking at could lead to working at an investment management firm.  Investment advisor can mean many different things, not always good.

CFA is a great route.  Having at least one exam under your belt when you start job searching can help a lot.

[BBub]

It's a tough call b/c if you were looking at undergrad and in U.S. my recommendation would be clear - econ....undergrad finance programs are fluff in the U.S.

Really - how can you expect a statement like this to be taken seriously?

[Sibley]

Economics is for those that don't have the personalities to become accountants...

(Sorry, old college joke we Liberal Arts majors used to fling at the finance majors when they would show up with job offers 3 months before graduation!)

Not so old - it's still current. Though I was the accounting major, and you can adapt it for many majors.

[young mustachian]

Allright I'll make an overview of my choices.

1) Applied economics - major finance or economics

Still an option. These are the courses that I'll take:

Core courses
Strategic marketing management
Accounting and audit
market research project
supply chain management
econometrics
Thesis

Major finance
Advanced finance
Economic analysis of banking
Insurance

I'll be able to graduate in one year if I choose this one. The downside is that I find it a bit less interesting than economics and the core courses are really general and while interesting, they're not really linked to finance.
I could later combine work and study to get a master's in economics, however than I'll have to take all of the courses in the master of economics

Major economics
Public Choice
Economic analysis of companies
International trade

I've decided that this is no longer an option. Although I'll be able to graduate as an economist in 1 year, many people here have stated that a job in economics is not easy to get. So this means if I decide to go economics, I'll need the best educatioin, which is an actual master in economics.

2) Economics - Major ?

The courses I'll have to follow:

Prepatory program:
Maths
Statistics
Banking and finance
Econometrics

Core courses
Macroeconomics 3
Microeconomics 3
Intermediate Econometrics
Thesis
(Micro- and macroeconomics 1 & 2 are taught at the bachelor (undergraduate in the US I think) level and were also given in my applied economics bachelor)

Major financial economics
Economics analysis of banks
Moetary policy
Investment

Major research heavily advises by the university to students who want to obtain a phd
Advanced Macroeconomics
Advanced Microeconomics
Advanced Econometrics

The big downside is that this'll take 2 years, ands it's much harder (especially maths), however I'm planning to hire a pivate tutor during the summer to really help me with maths if I choose economics.

On the bright side, this is the more interesting option. Macroeconomics is more interesting than finance (even though I also like finance) and this degree offers much more interesting and in depth courses than the economics major within applied economics.

I could combine the financial and research major. I'd combine the prepatory programma with some of the master's courses in the first year (major finance), and in the second year I could finish the master AND also take the advanced courses of the major rsearch. This is the best of both worlds! Career wise, I could go either way (my thesis would obviously focus on one major, which I'll have to choose in my second year.

[misschedda]

I'd like to add: did you do a phd?

No, I don't have a PhD, just an undergrad degree in Econ and Math. But I work in an office cleaning and working with data for economists, who all have PhDs.

[Davids]

I am going to suggest something different and go accounting, the starting pay may not be great but there is huge earnings potential and you can basically pick and choose any industry you want since everyone needs an accountant.

[darkadams00]

Master's in Econ here--In short, anything short of a PhD in Econ will not likely land you in a macroeconomics-focused job (and possibly no other econ-focused job either).

My econ master's degree helped my job search as a secondary contributor. My stats master's drove the interviews. The fact that I had two quantitative grad degrees with high GPAs, good experience, and excellent referrals landed me a great job with an awesome company in an awesome field. The econ degree was a contributor but probably the least significant contributor. A BS in econ would not have even landed me an interview in this area (Raleigh/Triangle area of NC) nor in Charlotte (where I grew up) even with the mega-banks downtown unless I had an inside referral.

BS in finance? Much better and can lead to a great sales/brokerage/consulting career or a master's in mathematical finance leading to quant finance, another great option for the math inclined. BS in accounting? Works as well. Complete your CPA, and you're on your way. BS in econ? Plan for the next step in school because an econ job is not likely to be coming your way.

[El Gringo]

darkadams00 - was your masters in applied econ?

[young mustachian]

I am going to suggest something different and go accounting, the starting pay may not be great but there is huge earnings potential and you can basically pick and choose any industry you want since everyone needs an accountant.

I've thought about that in the past, I've had some accounting courses in my bachelor and there is an accounting major. But I'm just not interested enough in it.

Master's in Econ here--In short, anything short of a PhD in Econ will not likely land you in a macroeconomics-focused job (and possibly no other econ-focused job either).

My econ master's degree helped my job search as a secondary contributor. My stats master's drove the interviews. The fact that I had two quantitative grad degrees with high GPAs, good experience, and excellent referrals landed me a great job with an awesome company in an awesome field. The econ degree was a contributor but probably the least significant contributor. A BS in econ would not have even landed me an interview in this area (Raleigh/Triangle area of NC) nor in Charlotte (where I grew up) even with the mega-banks downtown unless I had an inside referral.

BS in finance? Much better and can lead to a great sales/brokerage/consulting career or a master's in mathematical finance leading to quant finance, another great option for the math inclined. BS in accounting? Works as well. Complete your CPA, and you're on your way. BS in econ? Plan for the next step in school because an econ job is not likely to be coming your way.

Thanks for the info. Even thoought most of your info doesn't apply in Belgium, finance might be the safer choice...

[JohnGalt]

This should really just come down to what you're interested in both from a studying standpoint and for career choices - with maybe some consideration thrown in for the actual and opportunity costs of the different time periods involved.

My 2 cents as an Econ guy (BS) with a good friend who's a finance guy (MBA), I don't think you'll go wrong with either option. However, I enjoy the way Econ trained me to think and really feel that it set me up well for just about any field I could have gone into. Finance seems to have been much more specialized.  My finance buddy has told me more or less the same thing as we compare how our educations trained us to approach problems differently.

[NorCal]

I have an MBA in finance, working in corporate finance.  To be perfectly honest, both job paths are very different from what you probably have in your mind.  In fact, a lot of people with economics degrees work in finance.  You could end up doing largely the same thing.

Outside of wealth management, I don't see much automation on the horizon.  Corporate finance is already heavily automated with database software, but they always need good people to decide how the finances should be managed.  You can't automate that.  I personally find it rewarding.

Consider how work in economics would differ from your studies.  Most professional economists I know (an admittedly small sample) either teach, or spend their days trying to predict central bank actions.  Sounds boring to me.

[young mustachian]

I have an MBA in finance, working in corporate finance.  To be perfectly honest, both job paths are very different from what you probably have in your mind.  In fact, a lot of people with economics degrees work in finance.  You could end up doing largely the same thing.

Outside of wealth management, I don't see much automation on the horizon.  Corporate finance is already heavily automated with database software, but they always need good people to decide how the finances should be managed.  You can't automate that.  I personally find it rewarding.

Consider how work in economics would differ from your studies.  Most professional economists I know (an admittedly small sample) either teach, or spend their days trying to predict central bank actions.  Sounds boring to me.

Thanks for the very informative post!

I realise that an economics degree might lead me to a finance job. I wouldn't really mind. That's a plus of studying economics, I could go either way job wise. When I go finance, I won't be able to get a job in (macro)economics.