Finance Vs. Economics Which Degree Should You Go For

Job Growth

1 Calculated as the average of job growths for financial managers, insurance underwriters, personal finance advisors and financial analysts
2 Calculated as the average of job growths for market research analysts, actuaries, budget analysts and financial analysts
*Based on data from the US Bureau of Labor Statistics

According to the Bureau of Labor Statistics, finance and economics, are expected to have a job growth higher than the average for all occupations between 2012 and 2022. Economics is far ahead of finance in this regard with an average growth of 20%.
So why has finance been unable to keep up with economics? Finance is a sector heavily dependent on traditional banking, which has seen a consistent decline in the past decades. Increased competition in the financial markets has reduced the cost advantage that banks have had in acquiring funds causing traditional banking to lose profitability. In addition to that, innovation in technology has decreased the need for human capital in financial institutions.
Take insurance underwriters for instance. Automated underwriting software allows for a quicker process, reducing the need for underwriters. According to an analysis by Financial News in 2012, investment banking staff fell by a hefty 10,000 in one year. However, finance continues to be a lucrative market for individuals looking to become financial analysts and personal financial managers; jobs that typically do not fall under traditional banking and are more relevant for investment portfolios of large corporations and individual clients.
On the other hand, jobs for bachelors in economics paint a different picture. This sector owes its high growth to jobs as actuaries and market research analysts. The demand for actuaries is expected to rise in the health insurance industry, property and casualty insurance and risk management sector for large enterprises, though the number of jobs expected to be created is a mere 6,300 over the 10-year period (2012-2022). Market research analysts are in an equally optimistic place with companies becoming increasingly dependent on market analysis and consumer behavior to formulate advance advertising strategies.

Salary

3 Calculated as the average of job growths for financial managers, insurance underwriters, personal finance advisors and financial analysts
4 Calculated as the average of job growths for market research analysts, actuaries, budget analysts and financial analysts
*Based on data from the US Bureau of Labor Statistics

In terms of salary, finance offers a relatively better return than economics. Financial managers, who are earning $109,740, (the higher end of finance salaries) deal with very complex issues. They direct, plan and coordinate investments. As the US economy expands, the demand for individuals with such expertise continually rises. Recent years saw companies accumulating more cash on their balance sheets, contributing to the increasing demand for management of finance. Similarly, with a greater need for in-depth knowledge of financial products in a variety of geographic settings, the job description for financial managers is becoming multifaceted. This complexity is henceforth reflected in the salary for financial managers.
Economics is not far behind when it comes to salaries, with an average salary of $75,053. Majority of the reasons for this number are similar to those for finance; revolving around the complexity element. Actuaries, for instance, are required to carry out the complicated process of evaluating insurance products and costs of risk. Similarly, budget analysts are in-charge of intricate projects involving various types of complicated statistical data techniques. Economics majors are also required to keep themselves updated on the latest market conditions. This continuous learning process does not only keep the work interesting, but also contributes to higher remunerations in some cases.

Branches

Finance and economics careers can be divided into major branches. You can choose your area of interest based on these divisions and select a major specialization in college accordingly.
Finance has three major divisions. Personal finance is management of finances at an individual or family unit level, including obtaining, budgeting, saving and spending over time, with regards to financial risks and future life events. Corporate finance, on the other hand, relates to capital structure of corporations and initiatives that managers take to increase the value of the firm for their shareholders. The third branch of finance is public finance, which revolves around the role of the government in the economy. It is intertwined with economics and involves studying government revenues and expenditures.
Economics has two major divisions. Macroeconomics is the broader study of the overall workings of the national economy, dealing with income, output and the correlation between diverse economic sectors. Microeconomics, on the other hand, is a more detailed look at how individual businesses, households and persons within an economy allocate their resources.

Job Titles

This is a combination of data from the US Bureau of Labor Statistics and O*Net. Based on the ‘Similar Occupations’ data for Financial Analysts and Economists
The main difference between the kinds of jobs you can get with these two degrees is the type of organizations that hires you. For finance jobs, you would typically be hired by banks and financial institutions where you can help clients with their investment portfolios. Depending on the organizational hierarchy, you might be assisting people in getting loans, analyzing financial statements to understand your company’s performance or develop budgets based on the forecasts and needs of your clients.
As opposed to that, people with majors in economics typically work for government offices at the federal or state level. In some instances, they may be hired by private companies or universities. The primary job description revolves around analyzing the local or national economy, helping create and change economic policies for different areas and evaluating trends that affect the fiscal atmosphere. In addition, a solid proportion of economics majors, especially those at the masters in finance or doctorate levels, go into the teaching field, becoming researchers or professors in esteemed institutions in ideal cases. Research and statistical analysis is also a potential career direction for economics majors.

Relevant Skills

This data has been taken from onetonline.org. Based on the ‘Relevant Skills’ section for Financial Analysts and Economists

Business is a money game, and economics and finance are its major players. With high stakes, it becomes imperative for professionals in these fields to possess certain skills. As is evident, most of the skills required in both finance and economics jobs are overlapping. Critical thinking, which involves using logic and reason to determine strengths and weaknesses of alternative solutions, is considerably important. Good communication skills are necessary, since most of the work is integrated with other departments in the organization. Complex problem solving ability, while remaining calm is another important skill here, since a lot of times decision making requires strong nerves.
Keep in mind though, that personal development requires effort. These skills are not entirely acquired by fulfilling all educational requirements.

So before finalizing your future in either of these fields, make sure you know the territory well. Job growth, salaries, major branches, job titles and relevant skills should all contribute to making your decision a wise one. 

States with the highest employment level in this occupation:

Source: bls.gov