How Hard is Economics vs. Finance?

At my non-target, Finance majors are 72 units (tied for most units in a single major). Econ majors are 50 units. Interpret however you will.

I think so. Finance is more statistics and less theoretical. Econ is also more boring in my opinion.

It varies from school to school, at Illinois, it was about the same. Accy was much tougher as a major.

If you are in a non-target program, I would recommend pairing Econ with a quantitative discipline like engineering. Would set you up extremely well for an MFE program.

I am currently a sophomore majoring in Finance with minor in Accounting, however, I am not sure if it will be the best pairing if I am hoping for a career in IB. I am thinking of switching to Finance major/ Econ minor or Econ major/Finance minor but I don't know which one would be more beneficial. Can anyone give advice?

IMO, Economics is tougher intellectually and will also teach you how to think. Finance has an extremely narrow focus and most entry-level jobs or internships will teach you the financial skills you need anyway.

I'm biased of course, but I would encourage you to make the most of your educational opportunities.

I majored in Financial engineering and econ at a target. Fin engineering was way harder than econ, but the normal finance major was a joke.

Upper-level econ can be very tough. I suspect that generally speaking, econ is harder than finance at the grad level.

What kind of Math do you typically do in a finance course?

The math isn't hard in Finance. It's very simple, there are a ton of formulas. Options and Futures can be difficult for some people, but on the whole Finance is not that hard. It all depends though, I've known some people who were majoring in Acct who found Fin to be harder.

I would suggest you take atleast two accounting courses (Intermediate Acct 1&2). These courses will give all the foundation you'll need when doing financial analysis.

For the people that think finance is a joke major, it sounds to me like you're only familiar with basic corporate finance (which is all theory and almost no mathematical application). Once you break into quant finance, especially at the graduate level, it isn't exactly a walk in the park. I would argue that econ theory, at least at the undergraduate level (I can't comment on anything beyond that) certainly isn't what makes it difficult. If you're going to judge finance, don't just look at the easy parts of it. Also, consider that finance is very poorly taught at the undergraduate level in the US.

Finance and accounting are not difficult or really all that challenging in terms of intellectual rigor, they are more or less memorization of and understanding basic formulas (algebra mostly). Econ has a more calculus applications at the undergrad level and is definitely more of a thinking mans major.

Think I'll go with Finance. The math for Econ is scaring me lol.

I was an econ major and i had a bunch of friends that were finance majors. From what ive seen from their work in comparison with mine, I can say that econ requires more intuitive thinking, while finance is more linear. Interpret that however you like lol.

Econ is definitely much more intellectually rigorous. It requires deeper thinking and thorough understanding of complex material, and then applying that material to novel situations. On the other hand, finance is linear and straight-forward; memorization of a few formulas and basic mathematical skills suffice.

Put it like this. Econ is qualitative with a few key quantitative aspects, while finance is rote and repetitive, quantitative in every way. The proponents of each will say theirs is more challenging.

The "all of 5 minutes" argument seems to span entire internships and several months into full-time, so I don't buy it.

There is a difference between getting into IB (and getting by in IB) versus crushing IB. And what do you think happens when you interview for buyside, where your ability to get by off of bullshit is largely diminished and you're expected to actually know what you're doing and understand why youre doing it?

Im sure there are a ton of liberal art people who did HBS who are crushing wall street. Last time I checked, HBS is a business school which teaches finance. Liberal arts kids aren't idiots (a persons major has no bearing on their intelligence), but having an additional edge when it comes to knowledge can only help. Why do you think these guys needed to go back to get their MBA?

Are you still in college or have you just not updated your profile from Prospective IB?

I've done IB for 2.5 years. I know what needs to be known at this point. I was a triple major in college (Econ was one of them, no option for finance). The finance you need to know to do well in an IB non-trading/quant job is so incredibly limited that you can pick it up over a weekend if you're not clueless.

Seriously, if finance were so vital to success in IB, Ivies and other top 20 schools (excepting Wharton, I suppose) would actually offer it as a major.

I read through Wharton's complete undergrad offering. With the exception of some of the super niche topics, I am confident I could sit for finals in every one of those classes and pass them.

And for the record, HBS is not a finance-heavy school. The finance your typical student learns there is just a condensed version of undergrad finance for career-switchers looking to go into finance.

I have not updated my profile.

First off, I find finance, from an academic perspective, to be extremely interesting. This isn't a field that only offers value because it prepares you for IBD.

You mentioned that you can learn everything you need to in a weekend -- that may be true (probably not), but again, having additional knowledge going into a job can only help. When I interned back in the day, there was a very clear difference between the kids who had taken finance in school and those who had not. The difference did not disappear, even by the end of the internship. Had the gap closed? Sure, but it still existed. Good luck hitting the ground running in a field like restructuring if you've never taken a finance course.

Also, I never said HBS was a finance heavy school. I am quite aware that it is not (whereas Chicago and Wharton are), but it does give a liberal art major a strong intro into finance which is certainly helpful.

On a final note, I absolutely guarantee you would get crushed on anything related to options/futures. Good luck knowing the risk neutral / no arb methods with your IB background. The only things you would easily pass are the things pertaining to corporate finance and valuation. There is a whole lot more to finance than that, which goes back to my initial point. Lets not forget, this entire discussion isn't even relevant to the OP's question.

No one said finance wasn't interesting, well not me anyway. And no one said it was a narrow field as a whole, we're talking undergrad.

As this thread is in the IB forum, it's clearly being started by a kid who wants to do banking some day, so advanced option pricing formulae are irrelevant to his professional goals.

I think it's worth noting that any supposed material advantage a finance major has over an econ major in job performance in IB is limited only to the first few months/years of their careers. After that point, the econ majors catch up in terms of their financial knowledge, and rigorous financial analysis ceases to be part of their job responsibilities. As their careers progress, the econ majors will be better served by the critical thinking skills and fundamental understanding of markets that they learned back as an undergrad. Many of the biggest and most innovative professionals in banking and PE history were econ majors and never studied finance in depth.

Ok to back this argument up slightly...

We started off discussing which major is "harder" (not better). I don't particularly have a strong stance on this because I think the question is incredibly vague. What does "harder" even really mean? In our guts, we feel subjects like sociology/history are easier than mathematics/physics, but it is still quite subjective. Moving away from extremes, we are now looking at econ/finance which are two very closely related fields, and trying to say which is "harder". This makes our discussion incredibly subjective to the point where there isn't a right answer (given the lack of definition of harder, many people are on different pages). At this point, I wanted to correct the fact that the narrow view of corporate finance that you have is NOT representative of "finance" at large in an undergraduate academic setting. Therefore, you pointing out that "finance is easier than econ because you can learn corporate finance in a few days in banking" is a bullshit argument as far as I am concerned (and it is obvious where your bias is...how would you even realize how little you know about the topic unless you've majored in it? I don't know for certain what you majored in, but given your arguments, I highly doubt it is finance).

Now, we've moved away from the argument of which is harder to which is better. Again, this is undefined, but to me, "better" is the subject that will better prepare you for banking (specifically, your analyst stint as that is what is most relevant to prospective students). In my mind, from the perspective of which subject gives you the knowledge to succeed, finance is unequivocally the better major.

We are clashing here because you think "better" isn't what gives you knowledge to begin with, but rather what helps you succeed in the longer run (this is still within the definition of "what will better prepare you for banking" but with a bit more of a distinction between the short/long term). You have the idea that economics teaches you how to critically think in a superior fashion to finance. Overall, this means you're going to give econ more credit in the long run than I would (and finance less credit in the short term because you think the gap is eliminated more quickly than I do).

I don't think your argument holds much weight. We can both agree that finance provides superior "short term" (how short short-term is is certainly subjective, and I think it's longer than you think) knowledge, but we do not both agree about the critical thinking comment. I do not accept your statement that econ teaches you to critically think in a "superior" fashion to finance. My gut tells me that math/philosophy are the only two majors that truly teach you how to critically think, with any sort of applied math subjects being a slightly watered down version of mathematics from a critical thinking perspective (physics, engineering, etc.). Econ/finance are pretty comparable from the math perspective at the undergraduate level, assuming you're comparing quant finance to the more quant fields in econ (like econometrics, which you are). Therefore, I don't think you can objectively state that either subject is superior.

One last thing to note: given the recruiting process for the analyst stint into PE/HF, unless that gap is eliminated extremely quickly (which it really isn't), there will be an advantage to the Wharton kid who already has his shit mastered and can focus on the new stuff. I mean, how much easier is it to understand the mechanics behind a deal when you already know all the quant stuff? How much easier is it to discuss distressed debt opportunities or whatever niche field you're looking at when you've already spent a few semesters studying the theory behind these sorts of events?

TLDR: corp finance (qualitative finance) cannot be compared to econometrics (arguably the most quant portion of undergrad econ). Also, while "better" is subjective, we can both agree finance teaches you more to begin banking but we are at an impasse regarding which teaches you to better think "critically". This is because you are not providing anything to substantiate your comments. Am I supposed to take you at your word that econ is better for critical thinking? Come on now.

based on the unscientific sample below, it would seem that being an econ major puts you at no disadvantage to success in finance over the long term...

Famous Econ Majors:

Bob Diamond http://en.wikipedia.org/wiki/Robert_Diamond

Ken Griffin http://en.wikipedia.org/wiki/Kenneth_C._Griffin

David Tepper http://en.wikipedia.org/wiki/David_Tepper

Steven Cohen http://en.wikipedia.org/wiki/Steven_A._Cohen

Henry Kravis: http://en.wikipedia.org/wiki/Henry_Kravis

Robert Rubin http://en.wikipedia.org/wiki/Robert_Rubin

Jamie Dimon http://en.wikipedia.org/wiki/Jamie_Dimon

Paul Tudor Jones http://en.wikipedia.org/wiki/Paul_Tudor_Jones

Famous Finance Majors:

John Paulson http://en.wikipedia.org/wiki/John_Paulson

Famous English Majors:

Hnery Paulson http://en.wikipedia.org/wiki/Henry_Paulson

+1 for liberal arts...

eerer

Why are they more adaptable and capable? Are people who receive a top-class education in finance not encouraged to think creatively or outside of the box? Econ majors are encouraged to be critical thinkers and finance majors are encouraged to be drones? How is taking a finance major "short sighted towards IBD/PE"? Do you have anything to substantiate your claim other than your opinion?

If nothing else (I assume you won't bother to back up half the shit you've said, because it's opinionated unsubstantiated bullshit), please provide real evidence on how economics is an "education" more than finance. What is it exactly that you think Ben Graham taught? His students were..drones? Incapable of critical thought relative to the average economics student?

A lot of bold claims that you can't back up / substantiate in any way.

As a side note, I find it hilarious that you're comparing math/physics/philosophy with economics. Clearly an econ major haha.

Uhh, Buffett switched schools and graduated from the University of Nebraska. :)

If you really want a great thinking education do philosophy. It might not help you in the short term but it will improve your logical thinking, intuition, etc. and that can only help you. Consider finance or economics plus philosophy if you think you can maintain good grades and stuff. One of my regrets in college was not doing philosophy

UCLA is an econ major at USC.

Such passion............

yeah philosophy/math would've been great... I definitely feel I threw away my education with econ/finance but unfortunately I wouldn't have been able to get a job without it. As far as I'm concerned though, you can pick up a lot of this stuff yourself if you make an effort to go out there and read as much as you can. Reading 24/7 and being self motivated are pretty key.

All the comments thus far have been extremely helpful. If I finish undergrad with a 3.8, which major would likely get me into the better grad school? Econ or Finance?

I think we all agree that majoring in finance better prepares one for IB in the immediate short-term, i.e. two to three months. I concede that finance majors will hit the ground running while non-finance majors will expect to devote more time to broadening their knowledge of finance in the initial months on the job. Therefore, if you want to make significant contributions during the first few months of your stint--or at least the chance of doing something meaningful--then choose to major in finance.

Any competent individual, which we can expect as commonplace in IB, should have a command of mostly everything he needs to know for an IB stint, irrespective of his major, within two to three months after starting the job. Let's not forget the on-site training incoming analysts receive--training that BBs pay thousands of dollars for. Further, many incoming analysts--probably safe to say the majority--have previously interned in at least one if not more financial roles, if not IBD itself.

I think most of us also agree that undergraduate economics requires considerably more critical thinking than undergraduate finance, generally speaking. I'm not saying finance doesn't require critical thinking, but rather not nearly to the degree of economics. Finance essentially boils down to crunching numbers and applied mathematical concepts. The material itself is straight-forward and relatively easy to wrap your head around. Economics also involves crunching numbers and applied mathematical concepts, but intertwines these components with deep-level thinking and complex scenarios that are extremely difficult to wrap your head around. Quite frankly, finance provides you with a set of formulae and a set of numbers, and it's your job to plug in and solve. On the other hand, economics poses intellectually rigorous situations which you must thoroughly understand before you can even start thinking about numbers and formulae. Thus, economics students are generally well-versed in both critical thinking and quantitative concepts, while finance students are generally skewed towards the latter.

Put simply, if you want to forfeit critical thinking and complex reasoning skills that will prove essential later in your life for a short-term benefit in your IBD analyst stint, major in finance. Otherwise, choose economics. Alternatively, you could major in Financial Economics like me :)

econometrics fucks everything you do at undergrad finance in the ass. in so many ways.

/thread

It's all relative to the school and how the courses are taught. Every program has different requirements.

There are econ majors that don't require econometrics or any math past calc 2 for that matter. Some undergrad finance programs require advanced statistics and stochastic calculus.

Again, it would be nice if the people stating econ takes more critical thinking could actually provide some evidence rather than just broadly making such a bs claim. The burden of proof falls upon the claimant. Finance is more than just memorizing a few formulas and applying a few numbers (there aren't complex scenarios in finance? ..really?), what an idiotic comment. I legit don't know what sort of education you guys received to come to this conclusion. I doubt anyone from Wharton would agree.

I found both finance and economics to be quite similar regarding the degree of problem solving required, though there was a difference with the type of skill needed to do well. From my experience, the average finance course was more dependent on accounting/strategy whereas the average econ course was more dependent on math/clever thinking (variance between micro/macro though, with micro being largely math based and macro being more theoretical/high level thinking). Yes, econ definitely requires you to think outside of the box and be clever, but I think people are underestimating the strategy component in finance (strategy is, almost by definition, solely focused on critical thinking and problem solving). Furthermore, once you get into finance fields like distressed investing, you're combining finance with accounting, law, strategy, game theory, etc. These fields are extremely far from "simple" and my distressed debt class was probably the hardest I took in undergrad (other than advanced econometrics and advanced derivatives).

How about double major in economics and finance with a minor in accounting?

I never said that the accounting component of accounting required critical thinking -- don't put incorrect words in my mouth. Re-read what I wrote and try again. Apparently economics requires critical thinking but not reading comprehension?

The math required for finance can easily go beyond a 4-function calculator. Linear algebra/statistics are SO hard to master...lol give me a break, plus those were required for finance (at my school at least). You don't know what you're talking about and I'm going to end my discussion there.

What's with all these liberal arts people assuming that having a liberal arts degree automatically means that you are a "critical-thinker" and all those other buzzwords thrown around? I'm not hating on them since I have a lot of respect for math PHDs and whatnot, but assuming that a finance major is incapable of higher thinking just because of degree choice is as short-sighted as me assuming that all these philosophy and economics kids have no "concrete" or "application" skills and are just bogged down in theoretical models.

A degree doesn't define you as a person and honestly, its up to the individual to decide what his or her education is/what they want to learn. For example, I'm a finance major but I regularly read about economic theories on my own and am planning on reading philosophy since I've developed an interest in it. Will I be as intelligent about philosophy as a guy who has studied it for 4 years full-time? Probably not, but I can still get a good sense of how the world books because I choose to pursue this education on my own. Intellectual curiosity isn't something spoon-fed to you from a teacher; its something that comes from within. Sorry for ranting but my point is a degree doesn't teach you any of these long-term traits a lot of the liberal arts kids are claiming, in my opinion. I think that a person determines how one's education defines his or her life.

There are NOT high math/physics/chemistry requirements for the typical liberal arts major. Sociology, psychology, history, languages, etc...please.

I am sorry you study sociology taison.

This doesn't answer the OP's question at all, but consider this: hot chick with brains asks: what did you study, what do you do? you answer a) finance/finance, or b) history/finance

This is almost an impossible question to answer because it entirely depends on the school you attend but I will say, as an Econ major, I wish I had the option be a Finance major (they don't have it at my school) even though I think that Econ allows you to field a wider array of job oppurtunities out of college as its a more versatile study

im definitely a proponent of the liberal arts but to say that economics requires much more critical thinking than finance seems to be too one-sided. I'm sure asking questions about efficient markets (e.g. are the markets efficient?), the equity premium puzzle (why do equities substantially outperform fixed income securities even adjusting for risk?), black scholes improvements, etc. aren't easy. if you go to wharton or sloan, i'm pretty sure you'll exercise your mental muscles as a finance major (full disclosure: economics major, didn't major in finance at my school)

ToughStreet:

As a major, which one is harder? Econ seems to apply calculus and other types of math. I've never taken a Finance course so I dont have an idea.

Nothing is harder if you comprehend the philosophy of subject. Focus only on what you want to achieve. I think economics is a discipline that studies trade across all similar and dissimilar markets. It’s a social science that deals with concepts like price and demand. On the other hand, finance is a subset of economics that studies the financial markets. The financial market is a market that brings together borrowers and lenders to allow them to trade. It can also be called a fund management science that deals with how the funds are allocated or arranged for in a institution. Do yourself a favor and do like I did, go to the website Oil Trading Academy, the secret code is real I can tell you that, it really is controlled by a computer, just like they say, it's just amazing!"

To the OP, yes. I double majored in finance and econ.

Econ is WAAAAAAAAAAAY more difficult once you get into econometrics and myriad of regression types.

At the introductory level they're both jokes, though.

How about completing a Dectuple major in mathematics, statistics, economics, finance, accounting, classics, philosophy, history, political science, and Chinese?

lol why don't u take one of each and decide?

"Hey smarty pants. Political & science is a double major, so you listed eleven."

-Sarah Palin, Miss Alaska runner-up.

Honestly, a missing comma? I am sorry you have too much time on your hands.

lol, doesn't matter what you major in, as long as it challenges you to become a better problem solver, a better team player, and a better leader.

stick to one major and use the extra time to do real challenges (research, entrepreneurship, writing something that's actually good, become a good salesman). no point in being able to read some theory someone else came up with, lol, anyone can read someone else's work.

and in regards to IBD, technical skills aren't what really make it rain in IBD.