Economists can easily work in finance positions, as their knowledge and skills directly apply to the domain.
They can pursue careers in data analysis, risk analysis, investment analysis, financial planning, financial control or management, and financial consulting.
If you are studying economics or graduated with an economics degree, you may wonder how you can work in finance.
In this short guide, learn everything you need to know about the transition and if it is worth it.
Economists have an excellent foundation for working in finance.
They understand how to research, analyze data, extract relevant information, and develop insights, ideas, and recommendations.
In any finance position, these skills are essential.
Their core knowledge may have a larger scope, addressing economy-wide concerns and issues.
However, some economists focus on finance or business during their undergraduate or graduate degree.
If this is the case, they may have a deeper grasp of financial concerns than some professionals who only studied finance.
Depending on their preferred job, some economists may need extra business courses to curate readily applicable knowledge.
These classes may cover financial management, trading, securities, investments, mergers and acquisitions, banking, international banking, real estate finance, and derivative markets.
Ultimately, economists should find these courses relatively easy to understand and accomplish.
Academic institutions separate economics and finance as two disciplines with different degrees titles.
In economics, individuals study the production and transfer of wealth in society at large or select industries.
In finance, individuals learn how to manage the flow of wealth in governments, industries, or businesses.
Although the two appear distinct, they interrelate.
Economics has a direct impact on finance, and finance influences economics.
Since this is the case, many economists and financial professionals often look into other domains for data.
If economists take on a job within finance, they will bring a rare understanding of economics to their financial research and findings.
Also see Can Economists Predict Recessions?
Economics is highly advantageous for financial work.
It can help financial experts to:
- Understand the effects of federal economic policies upon consumers or businesses
- Predict consumer spending behavior and prepare companies for changing spending trends
- Prepare for changing industry or business conditions
- Comprehend how markets and stocks may change over time
- Assist firms or consumers make better financial decisions given the current or future economic climate
- Analyze how international economic events will affect particular countries
- Grasp which variables influence or affect financial outcomes
The main difference between economics and finance is that finance only looks at financial systems and wealth.
Economics looks at markets, consumer behavior, transfer of wealth on a large-scale, government spending, and goods and services.
Finance concerns itself with banking, stock markets, investments, assets, and consumer or business financial management and planning.
Ultimately, it is fair to assume that finance is a domain of economics.
However, in most cases, institutions consider each a distinct branch of business.
Prospective students may wonder if they should pursue economics or finance, understandably concerned with the difficulty of each academic program and career.
Most consider economics harder than finance because economists must learn and use advanced math.
Typically, they must take algebra, geometry, differential equations, calculus, and statistics.
During their career, they will likely use advanced software or calculators to solve problems and graph predictions.
Individuals must also be able to grasp abstract concepts and apply them to particular situations.
Additionally, they understand various factors, including economic policies, international trade, and global finance.
They should grasp how these variables interact and influence each other, affect the economy and society, and impact smaller sectors.
On the other hand, finance may be a more manageable program because it involves less math and focuses on straightforward, technical formulas and consequences.
There will be fewer abstract theories and concepts involved in finance as well.
Furthermore, many students find jobs directly after finishing a graduate degree in finance.
An economist should pursue a Master’s or Ph.D. as this is the typical entry-level.
As such, many prefer a finance career path as it is faster.
Salary is an essential element when people are choosing a career.
On average, economists earn more than any financial occupation in the United States.
The median salary for an economist is $105,630 annually.
Alternatively, finance salaries range from $49,470 for meeting and event planners to $95,570 for financial analysts.
It is important to remember that these salaries may increase depending on education level, experience, accomplishments, employer, and location.
Banks hire economists to study economic conditions, predict consumer behavior, provide market insights and develop client strategies
Since the economy and consumer behavior can change rapidly, economists must be able to research and analyze all relevant data and make continuous, accurate predictions.
They may compile insights and present them daily, weekly, or monthly to the office.
They create and publish comprehensive research reports to bankers, investors, and business clients.
Some economists may work on an advisory panel for the bank itself, consulting on business decisions and marketing initiatives.
Economists can work in many different places, including:
- Federal, state, and municipal governments
- Nonprofit organizations
- Consulting firms
- Financial advisory agencies
- Research and development services
- Academic institutions
According to the Bureau of Labor Statistics (BLS), most economists work in the federal government and their agencies.
They employ 28% of economists.
Consulting services employ 17% of economists.
Surprisingly, finance and insurance companies only employ 5% of economists.
If you are looking for a job as an economist, it may be easiest to find a job in government.
If you are struggling to decide between becoming an economist or a financial expert, it may be helpful to look at a few key factors.
These deciding factors include job qualifications, job opportunities and outlook, and salary.
First, economists must complete a graduate degree or higher in their discipline to obtain a career.
Financial occupations require an undergraduate degree, although students may wish to pursue higher academia to obtain better jobs or increase pay.
Second, there are a small number of jobs available as an economist.
The BLS predicts 1400 new job openings every year until 2031.
That said, economists can often pursue jobs outside their immediate profession as they have a wide range of knowledge and skills.
Alternatively, financial occupations include a wide range of options.
Graduates can be accountants, auditors, financial analysts, loan officers, personal bankers, investment specialists, management analysts, financial advisors, and more.
There are thousands of new jobs within any one of these occupations annually.
Third, economists earn more than financial positions on average.
However, finance analysts, advisors, and examiners are not far behind in median salary.
Finance graduates could easily boost their earning potential by pursuing a specialization, higher education, or gaining experience.
Economists and financial professionals have a great deal in common, as they handle wealth analysis and produce crucial insights.
If you have an interest in either domain, you will find your work fascinating and rewarding.