Again, those with undergraduate economics majors do well on average in the labor market.
Economics - $52,926
That's a 9.16% increase in nominal terms over last year.
Career options for economics majors vary from private consulting for businesses to working for government agencies.
Ironman at Political Calculations neatly summarizes this year's data in table form here. He also wonders why technically-oriented majors get higher offers than their liberal arts peers.
Let's take a step backward. The primary purpose of an accredited college education is to provide students with a means of demonstrating to others that they have acquired a given body of knowledge. So there must be something inherent in the body of knowledge that the student acquires that accounts for the discrepancy in starting salaries. What is it that the students in business and technically-oriented degrees are getting that the graduates of liberal arts are not?
He argues that to be successful, you need good ideas and the ability to execute them. He also argues, generally speaking, that liberal arts folks and the technically-oriented folks both tend to have good ideas, but the more technically-oriented people have more skills to execute those ideas.
A person's worth to their employer is dependent upon their marginal productivity which is in turn dependent on the skills the person has. Human capital development is part of the story, but it's not just about the skills that you obtain in college. It's also about your innate ability. Ignoring the development of human capital, the Spence signaling theory basically says that a degree from a particular college sends a signal about a person's innate ability. Saying "I graduated from Harvard" sends a stronger signal of ability than does "I graduated from Morningside College".
But signaling also applies to major choices. Saying "I graduated from Harvard with a degree in economics" might send a much stronger signal about innate ability than saying "I graduated from Harvard with a degree in History". The signal, of course depends on a lot of factors, and while one institution's "econ signal" sends a positive signal, another institution's econ signal may send a negative signal. In any case, you signal your ability with your choice of college, and you further refine that signal with your choice of major.
Lastly, I'll add a person's worth to their employer is not just dependent on their marginal productivity, but also on the value of their marginal product. The marginal product of the more technically-oriented people is probably of more value at the margin than that of liberal arts folks, generally speaking, and that would also explain the higher salaries of "techies".
Update: Dan Hamermesh has an interesting thing to note here.
I just published some research Iâve done on University of Texas graduates. While differences in earnings by college major are huge, once you account for longer hours worked by business and engineering majors, by the fact that they often have higher SAT scores, and other factors, the differences are much smaller; indeed, over half of the variation in earnings by major disappears.
In other words, the amounts of human capital generated in college by different choices of major are not so different from one another as most people believe. Liberal arts majors donât do that much worse than business majors; and economics majors do as well as business majors do.
If so, then the signal sent by the choice of major has zero value.
Update: Craig Newmark at The Door has more here.