Sunday, 11 May 2025

Why study economics? US graduate earnings edition...

One of the factors that should affect student decision-making is post-graduation income. Having invested a lot of time and effort (and money) in studying, that investment needs to pay off in some way. Higher lifetime income may not be the benefit of studying, but it is an important one. And so, majors that offer higher incomes might be more attractive.

The good news for economics graduates is that economics consistently rates as one of the majors that offers the biggest return on investment (whether measured in terms of lifetime earnings, or in terms of earnings X years after graduation). There is plenty of evidence to support this (browse through some of the links at the end of this post for some examples). The latest evidence, in the context of recent graduates from the US comes from this blog post by Marisol Cuellar Mejia and Hans Johnson. They looked at recent graduates, aged 22 to 27 years, using data from the American Community Survey. Their findings are neatly summarised in this figure (for the interactive graphic version, go to the blog post):

Notice that economics graduates are the third-highest earners within that age group among the 'top ten majors', behind computer science and nursing, ahead of business and management, and far ahead of sociology or psychology. The median earnings of an economics graduate in that age group was US$73,000 per year. Extending out to other majors beyond the 'top 10', economics is also behind engineering (electrical engineering, computer engineering, and mechanical engineering), and equal with finance (although the highest earners with finance majors earn more than the highest earners with economics majors).

Of course, there are some limitations to the data, and some fields (medicine, law) require graduate degrees in the US, so they aren't captured for comparison. However, it is clear that economics can be a rewarding career in monetary terms. And as a bonus, economics offers really interesting jobs as well (see some of the links at the end of this post).

[HT: Susan Olivia]

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