Economics Vs. Finance
Economics is a social science that examines the ways in which individuals, families and entire societies allocate resources that are scarce by nature. Finance is a specialized major within many universities' schools of business. Although some universities offer "economics and finance" degree programs, the two disciplines are quite distinct.
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Finance Features
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A course of study majoring in finance focuses on financial management, insurance, investments, banking and related topics. Because these issues involve allocation of financial resources, the field of finance is closely related to economics. Finance majors may supplement their business studies with courses in economics. Students who major in finance often do so with the intent of pursuing careers in banking, investments or related fields.
Economics Features
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Although the subject matter addressed by economics includes topics related to finance, economics is a much broader field of study. As a social science, along with sociology, political science and psychology, economics strives to understand a dimension of human and societal behavior: in this case, how individuals and societies deploy their resources, including their time, land and money, to meet their needs and wants. Because there is not an endless supply of resources, societies must prioritize their needs and wants, allocating available resources to achieve as many needs and wants as possible.
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Economics Potential
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Because of its emphasis on understanding how societies go about achieving their needs, economics yields insight into not only business transactions but also family decisions, education and health care systems, environmental protection and conservation and a full range of political and public policy issues. Many scholars and researchers who analyze public policy hold degrees in economics.
Significance
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The University of Connecticut's School of Business states that its undergraduate program in finance prepares graduates for careers in corporate finance, government, nonprofit organizations, accounting, banking and other fields. According to the school's website, finance majors can earn starting salaries of $30,000 a year or more, but that experienced financial professionals can earn more than $100,000 a year.
Information from the American Economic Association suggests that students majoring in economics follow similar career paths to those of students who study finance. Both types of majors can pursue careers in business, consulting, investment banking or government. In addition, both majors provide preparation for Master of Business Administration (MBA) studies or law school.
Misconceptions
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Because of its emphasis on investments, banking and other financial management issues, a business degree in finance may appear more marketable than a degree in economics. However, the American Economic Association, a national organization for academic economists, reports that economics majors actually earn higher starting salaries than students with business degrees, including those who majored in finance. According to the association, the average starting salary in 2007 for an economics major was $48,483 a year, compared to $47,239 for a graduate with a finance degree.
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