What do Elon Musk, Tiger Woods, Warren Buffett, Arnold Schwarzenegger and President Trump have in common? Besides being extremely wealthy, they were all economics majors!1 Once considered a path into academia, today’s economists have lucrative career options ahead of them including consultant, data scientist and, of course, economist. But a bachelor’s degree isn’t enough anymore-employers increasingly require a Masters of Economics degree for entry-level economist positions.
Few industries value higher education like consulting- a consistent destination for advanced degree holders. Having such a brainy workforce provides a competitive advantage and value-add for customers who require vetting of operations, processes and strategies (reducing potential liability). It also justifies the hefty fees consultants charge.
Virtually every consulting segment (management, IT, risk, economic, tax, marketing, investment, etc.) utilizes economic degree holders. The analytical approach to problem solving learned in economics programs translates well when dissecting business processes. But it’s the ability to communicate the findings to clients in an understandable manner that makes them repeat customers.
The obvious progression for a Masters in Economics degree holder is economic consulting, where the average annual pay is just over $71,000 according to Payscale.2 Through forecasting methods, these professionals are tasked with increasing economic gains for clients (i.e. profits). Economic consulting is also one of the few areas in business where you can expect to find more women (54%) than men.3
‘Vault’ has created a list of the top economics consulting firms and it’s the same names you’d expect- McKinsey at the top with the other recognizable brands (Ernst, Deloitte, PwC, etc.) also making the list.4 Of course, these firms have reach in nearly all the aforementioned segments.
The work at these top firms can be very demanding but the experience is invaluable. And having one of these names on your resume is a great predictor of an upwardly mobile career. But to get into one of these firms you should have a strong GPA from a top university or an advanced degree.
New employees or those immediately out of undergrad programs are known as ‘analysts’ (more of a rank than job description) at consulting firms. Analyst-level compensation is closer to the $71,000 cited earlier. But with an advanced degree, consultants typically earn the rank of ‘associate’ where total compensation is often double that of an analyst.
There are many niche consulting firms as well that aren’t household names such as Kroll, Mercer, Wellington and Bates White. In our Women in Risk Management article, we demonstrate how Kroll’s Reshmi Khurana used her Masters of Economics degree to rise through the ranks of risk consulting. She analyzes potential M&A transactions for hidden financial risks for clients- both acquirers and targets. Ms. Khurana is a Managing Director and Head of South Asia’s ‘Investigations and Disputes’ practice at Kroll.
Investment consultants like Mercer and Wellington are also major employers of economists, along with MBAs and CFAs. They design complex strategies for institutional clients (like pension funds and endowments) through financial and economic analysis. With literally billions of dollars riding on consultant’s investment advice, their clients welcome a highly-educated work force.
For example, investment consultants help determine proper allocations between large and small cap equities for clients- not an easy task amid current trade policies. On the one hand, overweighting U.S. small-cap stocks (more insulated against a trade war given their domestic-orientation) could seem prudent. But if fears of a trade war turn out to be overblown, such a strategy could backfire. Economic variables such as trade balances, foreign exchange rates and real wages are analyzed throughout the entire process. These are just one of many tough calls investment consultants must make for clients.
Data Scientist is arguably the hottest job title out there. And for good reason- Glassdoor pegged the average annual salary for U.S. data scientists at nearly $119,000.5 We define data science (a.k.a. data analytics, business analytics, Big Data analytics, business intelligence) as the ability to identify, gather and analyze any and all available information to make better business decisions. Here are some examples:
Data scientists can help businesses better understand processes like supply chain and production management. In making these run more efficiently, businesses become more profitable. For example, a business can better predict when a key supplier is experiencing financial duress. Monitoring social media outlets for negative feedback may uncover deteriorating customer service and portend trouble. Further, channel checks can uncover an increase in Days Sales Outstanding (DSO) and determine new collections policies are needed.
Financial institutions are paying big bucks for the Pandora’s Box that is predictive analytics. Such programs might help a community bank predict credit card delinquencies by analyzing floor traffic at a large regional employer. It can also help financial advisors source new clients.
You may be wondering, what’s the difference between a data scientist and a statistician. Valid point. Video-game streaming leader Twitch provided great insight as to how data science relates to their company. There, data science includes three main components-statistics, programming, and product knowledge.6 So statistics is just one part of the data analytics equation.
As a stand-alone position, statisticians average roughly $84,000 per year with job growth expected at 34% job growth through 2026, according to the Bureau of Labor Statistics, BLS.7 And while computer programming is another hot job, their average pay is nearly half that of data scientist.
Can a Masters in Economics degree really translate into becoming a data scientist? At a financial firm-absolutely. There is a natural complement between running large data sets for business analytics and economic forecasting. Today, a number of economics programs utilize the latest statistical software programs, like Stata, when running economic forecasts. So students will be familiar with such programs once they enter the workforce.
Finally, advanced-level degree holders have a leg up for higher-paying managerial positions in the data sciences. According to data from McKinsey, there is a 1.5 million shortage of managers with the skills to understand and make decisions based on analysis of Big Data.8
You didn’t think we’d forget the most obvious path- economist. What’s not obvious is that economist is one of the best paying financial careers- the average salary is over $102,000 according to BLS.9 But with this higher pay comes competition. In the past, filling entry-level economist positions was satisfied with a bachelor’s degree. Today, a Masters in Economics degree is generally the prerequisite.
Similar to data scientists, economists are number crunchers at heart and incorporate large amounts of data to make decisions. They must collect data (by conducting surveys and accessing various databases including the Federal Reserve Bank of St. Louis, FRED and the SEC’s EDGAR), create models (using programs like Microsoft Excel and Stata) and tweak variables to uncover usable insights. But there is more to the job description-economists must be able to prepare reports and make presentations to effectively communicate their findings to management.
Most economists work for the public sector, either with the federal government, or state and local agencies. They might work for the SEC, IRS or even NOAA, the National Oceanic and Atmospheric Administration, where they collect and analyze data on weather patterns, atmospheric pressure, temperature and precipitation levels. Keep in mind, economists could see stagnant job growth in the public sector as agencies face increasing budget cuts.
But demand for economists should remain strong in the private sector. And for good reason- their analyses can mean big bucks for a wide variety of organizations. Economists assist organizations with a variety of tasks including investment forecasting, litigation support and marketing research. Hedge funds employ economists to run scenario analyses to navigate market volatility, large multi-nationals use them to assist in legal matters, and consumer product companies in determining the optimum price for new products.
Investment banks like Morgan Stanley employ economists to conduct forecasts that lead to investment decisions firm-wide. Harley Davidson used economic inputs in a decision to assemble bikes overseas in response to current trade policy (tariffs). And economists for both AT&T and the government locked horns in the courtroom over AT&T’s proposed takeover of Time Warner.
These are examples of how economics is being utilized in practice. Many advanced degree programs are now teaching this type of ‘applied’ economics in lieu of simply economic theory. If you’re looking to boost your earnings potential into the six-figure range, while still working, consider the flexibility of an online Masters in Economics degree.
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