Marginal Revolution: Economics majors are rising

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Economics majors are rising

I had not known the trend was so pronounced:

The number of smart kids studying computer science peaked a few years ago and has dropped dramatically since. The number of new computer science majors today has fallen by half since 2000, according to the Higher Education Research Institute at UCLA. Merrilea Mayo, director of the Government-University-Industry Research Roundtable at the National Academies, says the drop-off was particularly pronounced among women.

Meanwhile, elite schools are reporting that the number of economics majors is exploding. For the 2003–2004 academic year, the number of economics degrees granted by U.S. colleges and universities increased 40 percent from five years previously. Economics is seen by bright undergraduates as the path to a high-paying job on Wall Street or at a major corporation.

Here is the full story.

Posted by Tyler Cowen on September 12, 2007 at 07:59 PM | Permalink

Comments

No wonder, starting salary for a BS in CS is around $50K, meanwhile bonuses on Wall Street are in the $100K range with starting salaries also around $100K.

The funny thing is how Microsoft dismisses the comparably low salaries and lack of job security as the real reason and, instead, decided that the real problem is that they are not using robots for teaching CS 101.

Maybe Bill Gates should study some Economics!

Posted by: billg at Sep 12, 2007 8:38:17 PM

Every time programmer salaries start to rise, Congress floods the market with cheap foreign labor via H1B visas. I'm surprised any Americans study CS at all.

Posted by: bob at Sep 12, 2007 8:44:44 PM

Compounding this is that many CS majors themselves are going into finance. I'd say about a third to a half of my year's (Harvard '05) Computer Science graduates took jobs on Wall Street.

Posted by: YGA at Sep 12, 2007 8:55:11 PM

Interesting story, but this reflects the perception that CS jobs are by in large moving to India and China. This may not be the truth, but it is the perception.

"In the meantime, because computer companies can't find homegrown talent, they have to search abroad. Consider H-1B visas that allow U.S. businesses to sponsor skilled foreigners to come work here."

We've heard this argument before.

In the end, the 'open source' will likely make Microsoft irrelevant.

Posted by: Ed at Sep 12, 2007 9:13:13 PM

Do the data show similar trends among the dumb kids studying computer science--have they peaked too?

Also, are dumb kids not bright enough to see that economics degrees offer the chance at high paying jobs on Wall Street?

What I really wonder, then, is what all the dumb kids are studying in college. Seems like that subject would be a good major, as it will prove easy for a non-dumb student to distinguish oneself from the crowd.

Posted by: Jo at Sep 12, 2007 9:23:40 PM

On the job hunt finishing my MA in Economics and all I can think is that they're going to push wages down.

On the other hand, maybe we will see better government policy in 10 years as more voters have Economics degrees. The money that I will forgo due to the competition will be reduced by a lower tax bill (please please please).

Also Wall Street firms generally only hire outside top schools when someone has stellar grades, so I'm not that worried. Econ majors: go into consulting or insurance.

Posted by: John Hall at Sep 12, 2007 9:28:19 PM

The article cites a drop in CS enrollment and simply assumes that it's the "smart kids" that are not enrolling, without a whole hell of a lot to back that up. Maybe the dumb kids have stopped enrolling (because there were a lot of dumb ones enrolled when I was teaching CS in the late 1990s).

Enrollment at "elite schools" is not necessarily a gauge of enrollment by intelligence.

Posted by: JMR at Sep 12, 2007 9:32:49 PM

They think that they can attack the problem by making CS 101 more interesting, but hell, I'd say Econ 101 was pretty uninteresting for me and was largely based on the "theoretical tools" that they are so against in the CS classes. I remember thinking how much of the concepts taught in econ 101 are common sense. Therefore, I don't find the root of the problem to be the classes but simply the job market for CS majors once they get the degree.

Also, the number of popular economics books has increased quite a bit in the last 5 years or so. I'm sure if we had a few "Godel Escher and Bach"'s things would change for the computer guys as well.

Posted by: philosophking at Sep 12, 2007 9:42:40 PM

I blame it on MR.

Posted by: mr at Sep 12, 2007 9:53:02 PM

If you really are the best and brightest, you can easily make 500k+ a year after 5 year with the big boys on Wall Street. Yes, that is right, half a million a year every year.

Of course, 500k a year is nothing on Wall Street, where do you think Ben's money goes to when he drops it from his helicopter?

Posted by: public at Sep 12, 2007 10:33:35 PM

Here in India, just the opposite.There is a mad rush for computer studies and such kids are considered as brightest.These kids aim at US or some European company jobs, eager to desert India with zero loyalty to India and zero commitment to Indian society.A shameful state of affairs.
Those less-mark-grade students opt for traditional subjects like economics,literature,zoology,botany etc and the entire society looks at them with a condescending smile.Economics has virtually become a female dominated subject so that in class rooms girls are majority.In under and graduate classes,for example,there are very few boys.

Posted by: GVV at Sep 12, 2007 10:36:01 PM

---Economics is seen by bright undergraduates as the path to a high-paying job on Wall Street or at a major corporation.

Really? the bright undergrads are stupid about this? are you sure?

At best, tthe above sentence demonstrates that undergraduates don't know the path to a high paying job on Wall street or a major corporation if they think a specific major matters at all.

Posted by: anonymous at Sep 12, 2007 10:38:35 PM

I've been a developer for the last 12 years. Between 2001, 2003 and 2004, I spent almost 24 months out of work. Young kids aren't stupid. They see what is going on, and they vote with their feet. Last year was the first time since 2000 that I was able to put money away for retirement. This sort of thing happened with engineering when the cold war ended. It is only this year that wages are starting to approach 1999 wages for software developers.

Posted by: Peter at Sep 12, 2007 10:43:50 PM

I was a computer science major from 1996-2000 and a graduate student from 2003-present. From what I've seen at several schools now only the people actually interested in the subject are majoring.

Gone are those who majored but were never any good at it. (This is back when you could get a job at a startup by passing the "fog test": if a mirror under your nose fogged, you'd be hired.)

It takes a mind that is very good at abstraction and you have to like building things. You can get to the fun stuff in your first year. Compare that with physics or economics, where the fun stuff doesn't happen until graduate work or the upper-level courses. (While learning the subject of econ or physics may be fun you're not given the chance to *build* until later.)

Posted by: Macneil at Sep 12, 2007 10:44:25 PM

Well, we are arguably in the last stages of a boom involving finance along with the fact that some of the “elite schools” do not have business colleges. So, I am not surprised.

Posted by: Hubris at Sep 12, 2007 10:50:26 PM

The average career lifespan within the industry for computer science graduates is somewhat limited. Twenty years after graduation, about 80% of computer science graduates no longer work in the field, and this trend long predates the trend of outsourcing IT overseas in recent years.

The source for this figure is the occasionally controversial Norm Matloff (citing a 1993 national survey of alumni), who blames ageism. No other profession has a comparable attrition rate; the nearest comparable case is civil engineering, with a 50% retention after twenty years.

In that sense, programming or software engineering is not really a rational career choice for Americans, since they have other options that offer the possibility of at least remaining within one's chosen field until retirement.

Posted by: at Sep 12, 2007 11:11:13 PM

Read "Liar's Poker" by Michael Lewis.

Posted by: baiano at Sep 13, 2007 12:01:40 AM

According to http://www.naceweb.org/press/display.asp?year=&prid=264 ,Computer Science majors avg starting salary is 53k, while Economics is 47k. Also only a small percentage of econ grade makes tons of money on wall street. Wall street companies also look for a lot of people with computer science degrees.

Posted by: azer at Sep 13, 2007 12:03:54 AM

I was a CS major at MIT and was heavily recruited by Wall Street firms. My friends who were studying economics did not do nearly as well right out of college. The CS major is a modern "liberal arts" degree; you can do almost anything with it. In my case, I am getting my PhD in economics. I think studying economics instead of CS as an undergrad just signals that you want a high-paying job without having to do any hard work.

Posted by: momsoton at Sep 13, 2007 12:21:37 AM

public - how do you signal you are the best and the brightest? By putting yourself through grueling mind-numbing programs where you cannot have a social life?

anonymous - what does matter if you want a high paying job?

Posted by: ralph ruben at Sep 13, 2007 12:32:40 AM

Economics and Computer Science are both excellent majors and provide excellent mental training in problem solving. I'm more concerned about the students choosing the bizarre specialized, politicized humanities majors.

Posted by: Jeff at Sep 13, 2007 12:35:46 AM

Gates is good friends with Warren Buffett. Buffett and his business partner Charlie Munger have decried the Wall Street finance mentality for many years. They perceive much of Wall Street to be zero-sum. Money moves around and wall street takes it's cut, but overall society is not benefiting much.
On the other hand, they believe new software that is helpful and productive benefits society greatly. So, from that perspective, computers scientists and engineers are preferable to Wall Street financiers and their lawyers.

Posted by: Jeff at Sep 13, 2007 12:44:27 AM

Ceteris paribus, salaries will be higher in finance than in programming because programming is actually fun. Look at all the people working on open source projects -- Linux, Apache, gcc, Gimp -- in their spare time. There's nothing like that in finance (or indeed in economics).

Posted by: Ted at Sep 13, 2007 1:01:26 AM

I see this pattern occuring in two main ways. Note that many of the good econ students don't fall into either of these categories, as they are not the marginal student of economics.

1. Students interested in the social sciences or "pre meds" who figure out sooner rather than later that they aren't going to med school realize that economics is the easiest way for them to get a relatively high paying job.

2. Students majoring in CS or engineering "drop out" into econ because it is easier and is at least known for having some math/job prospects. The math part may be more for calming down their parents than for their own interest.

Both of these groups of marginal econ students contain members with the mistaken impression that an economics major will give them the tools to beat the stock market.

It is an interesting trend.

Posted by: agent00yak at Sep 13, 2007 1:28:44 AM

Ah... As a recent economics graduate, I think we younglings are doomed by the law of supply and demand.

Posted by: Hafiz at Sep 13, 2007 4:54:21 AM