Careers in Business Economics
"Careers in Business Economics 2004-2005" published online by the National Association for Business Economics presents essential information for those interested in careers in business economics including education requirements, other skills and personality traits, salaries of business economists, and the future of the business economics profession.
Education Required for Business Economics
To work in the field of business economics, an individual should obtain a sound undergraduate education that includes training in economics and a number of related subjects. These include finance, cost and financial accounting, business administration, statistics, mathematics, and English. It is essential to be familiar and comfortable with the computer. A good college or university will be able to provide undergraduate training, but for advancement and long term success as a business economist, it is advantageous to pursue graduate study in economics and related subjects taught in graduate schools of business administration or in graduate departments of economics at the major universities.
If a person is able to finance full time graduate study and willing to postpone entry into the business world for a few years, he or she can go to graduate school directly from college. On the other hand, if an individual prefers not to delay work in the business world, he or she may be able to obtain a full time job as a junior business economist after completing undergraduate study, and carry on graduate work on a part time basis. Because business economists are most often generalists rather than specialists, they should have a broad, rather than a narrow, education in economics and business administration. Given their broad foundation, an employer will have an easier time in teaching the particulars of the firm and industry.
Generally speaking, business economist should be familiar with as many of the major field of economics and business administration as possible. A recommended course of study for a master’s degree in business economics would include the following courses:
- Microeconomic Theory (6 hours)
- Macroeconomic Theory (6 hours)
- Statistics/Econometrics (3-6 hours)
- Business Cycle Analysis/Forecasting (3-6 hours)
- History of Economic Thought/Economic History (3 hours)
- Monetary Policy (3 hours)
- Fiscal Policy (3 hours)
- International Economics (3-6 hours)
- Tax and Regulatory Issues (3 hours)
- Accounting (3-6 hours)
- Finance (3 hours)
- Marketing (3 hours)
- Organizational Behavior/Human Resource
- Management/Operations Management (6 hours)
This is a demanding curriculum based on surveys of business economists who were asked to list courses they have found valuable, wish they had taken, and/or look for in the people they hire. In addition, aspiring business economics should look for ways to develop verbal and written communications skills, either through course work or constant practice. Not all business economists need to specialize in statistical and mathematical techniques. Much of the quantitative work (like forecasting) is now done by consulting firms (employing many economists). In fact, for the majority of business economists, the ability to write clear, correct, and readable English is a more important asset than a highly technical knowledge of statistics and mathematics. Nevertheless, all business economists should have at least some knowledge of quantitative techniques.
In addition to the core subjects of economics and business administration, the business economics student would be well advised to include courses in history, political science, psychology, and sociology, all of which help to understand society in broad terms. These courses can be taken as part of the undergraduate degree. Business economists also need very good computer and Internet skills
Like most of the professions--particularly those that require graduate study--business economics requires the mental ability and other skills normally associated with students who rank in the upper 25 percent of their high school class, and the upper 50 percent of their college class. It usually happens that students who like certain subjects in high school, college or graduate school will be interested in a career that requires them. To state this principle another way, the process of choosing courses is really a self selection process by which students discover what subjects they like and in which they can do well.
Applying this principle to a career in business economics, we can say that a student who likes and does well in courses in economics and business administration is very likely to enjoy the work of a business economist. It may be, of course, that a student likes the world of business but finds it difficult to relate classroom studies to business activities. In instances of this kind, begin working in business and pursue studies on a part time basis. If you have business experience in your background, you will find that academic course work becomes more interesting and relevant.
Other Skills and Personality Traits
Besides a formal education, successful business economists should know how to communicate. Results are normally presented to others in the business firm, but economists must also communicate with people outside the firm--such as customers, legislators, stockholders, and the general public. Thus, business economists must know how to make the results of their work understandable to a wide range of people. Some persons are well versed in economic and business principles, but many are not.
This important communications function requires and ability to write and speak clearly, effectively, and concisely. Business economists must know how to phrase complicated economic concepts in standard language and how to use visual aids such as charts and graphs for presenting concepts, principles, and conclusions. Effective business economists must be easy to talk with and easily understood.
Business economists, like others in business, often work under pressure and must reach conclusions without as much research and analysis as they were taught in academia. Thus, the ability to handle many tasks at one time, meet deadlines, and supplement research with judgment and intuition are essential. In short, business economists must know how to analyze economic problems and communicate with others inside and outside the firm.
Salaries of Business Economists
As a group, business economists receive excellent salaries. A survey conducted by the National Association for Business Economics (NABE) in 2002 found that business economists had an average (median) base salary of $94,000 per year. Nearly 47 percent of the respondents reported salaries between $50,000 and $100,000, with 47 percent reporting base salaries at $100,000 or more. NABE also found that 63 percent of those business economists responding to the survey received additional compensation from their primary employment; the median amount reported was $15,000. Even with three recessions and corporate downsizing in the late 1980s/early 1990s, the median base salary and additional compensation from primary employment of economists has doubled since 1980.
The 2002 survey also indicated that the largest employers of business economists were the government (including central banks), firms engaged in consulting, and financial institutions and insurance. Economists in the securities and investments sector were the most highly paid with a median base salary of $125,000 and additional compensation from primary employment of $60,000. Economists in consulting followed with a median salary of $108,000, with additional compensation of $13,000. The lowest salaries were recorded among economists in academia (with corresponding median base salaries of $82,750).
Education plays a significant role in explaining salaries. The greater the schooling, the higher the income: the median base salary of a Ph.D. economist was $108,000 per year while economists with masters degrees earned an average $84,500 per year. Experience also plays a large role in wages. The median base salary of economists who had up to four years of experience was $65,000 in 2002, while those economists with 5-9 years experience earned a median salary of $83,000; and those with 10-14 years experience earned $93,000 per year.
New economists with a bachelor’s degree were most sought after in 2002. The median starting salary was $38,000. Those with a master’s degree in economics could start at $48,000, while new Ph.D.'s were able to command a starting salary of $70,000. Economists could reap further rewards. Many business economist move to managerial positions where they can employ their unique skills to evaluate the work of others and translate their findings into practical business policy.
The Future of the Business Economics Profession
More and more firms are becoming aware of the contribution that business economists can make in day-to-day decisions. One reason for this greater awareness is that a growing proportion of middle and top management has a master’s degree in business or similar training that equips management to understand and utilize the professional work of economists. Another reason is the growing complexity of domestic and international economics. Business economists are increasingly asked to work with other specialists in business-- investment bankers, lawyers, accountants, treasurers, engineers, and others--to assist in solving problems. This trend, too, indicates an expanding role for business economists.
Finally, the career of business economics is increasingly recognized as one of the routes to top management. In recent years, business economists have become presidents or senior officers of banks, insurance companies, trade associations, investment houses and industrial companies. Although not all business economists are capable or even desirous of advancing to a top management position, it is clear that economics is a business function of central importance and thus can be a pathway to the top. Indeed, economics is the second most likely undergraduate major (after engineering) that today's CEOs have. Interestingly, two NABE past presidents are currently presidents of federal reserve banks, one is president of a very large national bank and another, Alan Greenspan, heads the Board of Governors of the Federal Reserve System.
If you have inclinations toward government policy positions, never fear. Recently, among the top seven industrialized countries, the key central bank governor is an economist in Great Britain, Germany, Italy and the U.S. In France and Italy, the Finance Minister also holds an economics degree. Looking at twelve developing countries, all but one of the central bank governors holds an economics degree. Among the finance ministers, all but three hold economics degrees. Clearly, economics is a useful background for government policy.
©National Association of Business Economists 1997-2004, www.nabe.com