You should consider studying economics if… by Michelle G. '18

So if you’ve been reading these blogs for a while now, you might already be familiar with my experience of choosing a major. In summary, I came into MIT not knowing what I would study, ended up going with economics (Course 14), realized over the course of the following year that this was a really good decision, and continue to highly recommend it. I like to talk about my major a lot, but one thing that I guess I haven’t mentioned here before is my feeling that it is super under-appreciated by undergraduates in terms of the number of people who do it. As of some time in the fall of last year, there were three economics majors in the entire class of ’18. Seriously, three (!!) out of over a thousand.

On first glance, it’s hard to see what’s not to love about the department. We’ve got a high density of intimidatingly famous economists, course material that is relevant and cool, diverse job prospects after graduation, and some #1 world rankings by those sketchy university ranking websites. I guess a lot of people do come here with their hearts set on building robots and stuff, but for those who aren’t quite sure of what to do, I would suspect that the under-appreciation is at least partly driven by two things. The first thing is that it’s been somewhat inflexible in terms of course requirements, with a single program and core courses which may or may not be relevant to the subfield that each student prefers. I say it’s “been” in the past tense, though, because as you might have heard, there are a lot of changes to the undergraduate program starting this year. In May I received an email with the subject line “Revised Requirements for the Economics Major” which announced that the traditional Course 14 major (now 14-1) would be amended in a way that gives several options in places where there was previously a single required course, as well as reducing the number of electives needed overall. More dramatically, the department would also be adding an entirely new major, Mathematical Economics (14-2), which would focus more on the abstract, mathy subjects in economics, incorporate a foundation of pure mathematics, and allow electives in Course 18 to count towards the degree. It’s also flexible in a way that I think will end up allowing more people to major or double major in economics.

Sample Mathematical Economics Major (not counting GIRs, of course)

A second reason for the relative smallness of the major is probably something to do with people just not knowing enough about it, and not really giving it proper consideration amidst all the talk about big majors like EECS. MIT is best known as an engineering school, so it makes sense that economics isn’t in the limelight among undergrads, but that totally doesn’t mean it should be overlooked. There’s also the fact that people often judge a major by its intro classes, and 14.01 and 14.02 (Intro Micro and Macroeconomics) are sometimes said to be among the least engaging classes in the major. I basically remember coming out of 14.01 with the impression that economists spend all day doing basic algebra and drawing supply and demand graphs. Either way, although Econ isn’t the major for everyone, I do think it’s “for” a lot more people than are currently actually studying it. More people should know more about Course 14, and for that I will do what I can.

So, while I don’t think this blog post is the optimal place for information about what you can do with an economics degree (use the Internet, ask your professors, advisor, etc!), I can definitely tell you about what it’s like to study economics as an undergrad at MIT, and why I personally find it to be enjoyable and rewarding. You could ask a different Course 14 person and easily get a different perspective on it depending on their individual interests and plans. Based on my own experience, though, I think you should consider studying economics if…

• You’re curious about people and human society, but prefer an analytical, mathematical style of reasoning that isn’t provided by the humanities.

One of the reasons I was initially so unable to decide what I wanted to study was that I thought I had to choose between an analytical style of problem-solving and an interest in human beings. I did enjoy the humanities a lot, but I couldn’t see myself abandoning the satisfaction of technical rigor in my chosen field of study. At the same time, I couldn’t imagine keeping myself motivated to endure gruesomely difficult math psets and sleep-deprived nights spent studying if I couldn’t visualize what the math was for, or immediately be assured that its conclusions mattered to me. Abstract concepts were cool and interesting, but I thought that people were important.

That isn’t to say that there aren’t applications of every field which impact people in highly significant ways, but economics is different in that the abstract concepts you’re studying are people, or approximations of them and their behavior. The basic conceptual units of neoclassical economics are decision-making agents, who are assumed to make rational decisions to maximize their overall happiness (“utility”) or profit in the case of firms. The paradigm begins with some idealized assumptions about these agents and mathematically proves what the societal outcome will be given their interactions in certain (also idealized) scenarios. Real life is hardly ideal, though, and these predictions might bear only passing resemblance to the actual world. The more interesting results come when we relax the assumptions, add complexity to the agents and scenarios, and allow for uncertainty, though not so much as to make the models intractable. It’s also important not to forget that neoclassical economics isn’t the only economics, and that there are other highly influential ideas about how to construct these models which you can learn more about depending on which classes you choose to take.

• You want to understand how the world works

In a class I took last semester, we would often be assigned to read an article or paper about a real-life event related to industry or business and then spend the next lecture discussing game-theoretic models to explain why they made sense. In a different class I that took last semester, we studied a different economic paradigm which attempts to axiomize a set of social and economic principles to not only explain, but predict how societies change over time. In another class, we learned about empirical and statistical methods used for extracting relationships between measurable variables in real-world data, and for interpreting them.

I definitely would not say that economists understand the world – far from it. They disagree with each other in major places and are generally very bad at predicting important things (for example, there were basically no economists who predicted the massive financial crash of 2008). The way I see the field, at present, is that a bunch of different perspectives each bring their own partial truths to the table: models which are good at describing some things, but not others, and equations which appear to hold true remarkably well until they don’t. The reality of the world is chaos, and entirely taming that chaos into a neat and comprehensible form is undoubtedly an impossible task. So, economists will probably never “understand the world” in the scientific sense of making it predictable, but they do understand parts of it pretty well, or are beginning to.

This is of course exciting in itself, but it’s also exciting because the next time people around you are yelling about some government policy, you can have something intelligent and empirical to yell back instead of pure opinion. You can think about popular issues through an economic lens to be a more informed and reasoned citizen, and start to understand the implications of economic events that you see on the news. And if you’re a person who looks at current trends and issues and wonders what’s behind them, then you’ll find satisfaction in learning the tools by which to approach these questions. Like, how do people actually make decisions? How does health economics work? What impact do new technologies have on job prospects for young people? To what extent are there really trade-offs between high living standards and equality? Why are business cycles a thing?

There’s also the fact that the scope of economic modeling isn’t limited to “economic” questions, as in situations where money and commerce are central. Many of these models, particularly in Microeconomics and game theory, are useful in understanding phenomena ranging from the everyday to the political to even the biological (see evolutionary game theory). For example, the prisoner’s dilemma, which is likely the first thing you’ll learn about when studying game theory, has been proposed as a mechanism behind both nuclear arms races and people not washing dirty dishes in a shared kitchen. As an economics student, you might start to think about everyday behavior using game theory, see signaling in social situations, or encounter the structures of the models you study and speculate accordingly on their outcomes (like, how could the mechanism of competition in college admissions play out over time?). You’ll be amused if it actually happens that way, and if it doesn’t, then you’ll be in good company among actual economists who are bad at predicting things anyway.

• You like to think about improving the world

There is this thought experiment which we covered in the class 17.01 last semester. It was conceived by the philosopher Peter Singer, who describes it in an essay entitled “The Drowning Child and the Expanding Circle”. It starts like this:

“To challenge my students to think about the ethics of what we owe to people in need, I ask them to imagine that their route to the university takes them past a shallow pond. One morning, I say to them, you notice a child has fallen in and appears to be drowning. To wade in and pull the child out would be easy but it will mean that you get your clothes wet and muddy, and by the time you go home and change you will have missed your first class.

I then ask the students: do you have any obligation to rescue the child? Unanimously, the students say they do. The importance of saving a child so far outweighs the cost of getting one’s clothes muddy and missing a class, that they refuse to consider it any kind of excuse for not saving the child.

Once we are all clear about our obligations to rescue the drowning child in front of us, I ask: would it make any difference if the child were far away, in another country perhaps, but similarly in danger of death, and equally within your means to save, at no great cost – and absolutely no danger – to yourself? Virtually all agree that distance and nationality make no moral difference to the situation. I then point out that we are all in that situation of the person passing the shallow pond: we can all save lives of people, both children and adults, who would otherwise die, and we can do so at a very small cost to us: the cost of a new CD, a shirt or a night out at a restaurant or concert, can mean the difference between life and death to more than one person somewhere in the world – and overseas aid agencies like Oxfam overcome the problem of acting at a distance.”

The essay demonstrates the importance of donating to help the people who need it most, a perfectly good and true message. But while we were learning about it, I was also sort of thinking like, sure Peter Singer, I would save the drowning child, but the reality you’re trying to parallel isn’t really much like that. A better analogy would be something like this: you’re walking along on your route to class and all of a sudden you come across an enormous lake in which, say, millions of children are all simultaneously drowning. You first scream in terror, and then maybe just stand there paralyzed by your shock at how something like this could possibly be real (“I hope this is all just a thought experiment..”) and then you then look to the sides of the lake and notice that thousands more children are falling into it by the second. It’s terrifying!

So what do you do? You could jump in and save a few of them, but after a while you’ll start to feel that it’s futile. At that point you could run away and try to forget what you saw, but if you really want to help them, you might start to wonder about the reasons why all of these children are falling into the lake in the first place while you remain safe and dry. It isn’t just a random accident where some kid happened to fall in one day, and it’s obvious to you that there’s some kind of structure behind it. Here you can start to think like a scientist: “how do I figure out what that structure consists of? What can be done to fix it?”

Some of the most prominent work that has come out of our Econ department attempts to answer these questions. If you’re interested in learning more about it, I will recommend you the books Why Nations Fail and Poor Economics, which represent two very different approaches to these questions developed here at MIT. One theorizes on the role of institutions and political power on economic outcomes, while the other emphasizes empirical experimentation (conducted by MIT’s JPAL) as a way to understand and alleviate poverty. I remember someone at CPW told me she decided to come to MIT and major in Course 14 after reading Poor Economics, which is awesome, especially because we have the opportunity to do this kind of research while still an undergraduate.

Other than that, economics is indispensable in solving all sorts of problems, like in designing and evaluating policy, improving logistical efficiency, and designing institutions that improve the way people work and live. Personally, I’m not really sure what I’ll end up doing, but one of my favorite parts of the major is being immersed in all the normative implications about what can be done, theoretically or empirically, to make a significant difference in people’s opportunities and outcomes. The question of “what should the world be like?” isn’t reserved as a private, personal value question, but thrown out in the open and debated as a major part of the discipline.

Anyway – maybe these reasons will apply to you more or less depending on what you want to do, but they cover much of what I enjoy about the subject, and I hope they can be useful to you in deciding what you want to major or double major (or minor, concentrate, whatever) in. I’d also be happy to chat if you have any questions or anything. Otherwise, good luck to you and happy major choosing. :)