A Ph.D. in economics

So you're thinking about life after college and possibly interested in applying to graduate school in economics ...

Table of Contents
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Why go to graduate school in economics?
Graduate school in economics is a not an easy road, but it can be a fulfilling, challenging, and enjoyable process. You should consider graduate school in economics if it will help you get the job and lifestyle that you want. Depending on your ultimate employment goal, a Master's, Ph.D., or even M.B.A. will best facilitate your achievement of that goal. Please contact any of the faculty early to ask questions and discuss your plans. Preparation is key, so seek advice during your first two years on what courses to take during your remaining semesters.

How long does it take to get a Ph.D. in economics? back to top
Generally five to six years, although four is not unheard of and some students do have a hiatus or linger in graduate school. Typically, the first two years are consumed with coursework and passing comprehensive examinations, followed by two or more years of writing a thesis proposal and completion of the dissertation.

What is a typical course of study? back to top
Typical first year courses are microeconomic theory, macroeconomic theory, quantitative methods/econometrics, and economic history (although it is my understanding that, unfortunately, some programs are phasing out the history requirement), followed by written comprehensive exams in micro, macro, and econometrics. Second year courses are in applied fields and advanced theory, followed by qualifying examinations in 2 to 3 fields of the student's choice (written at some places, oral at others). This is followed by a period in which you attend and participate in the department's seminars and workshops and develop a proposal for your dissertation. Some programs require an oral defense of your proposal, others simply written approval. Then comes the dissertation writing stage in which you work with your advisors to develop a body of original work worthy of a Ph.D. and which culminates in the dissertation defense, a forum, typically open to anyone but in practice attended primarily by your committee, where you present your work and answer faculty questions. You will have anywhere from three to five faculty members on your dissertation committee. With some you will work closely; others will be less involved in your work, serving primarily as readers.
Consult the list of Ph.D. programs in economics for specifics on particular degree requirements at a given university.

What can you do with a Ph.D. in economics? back to top
A Ph.D. in economics can prepare you for a wide variety of careers. You can go into academics (teaching and research at a university or college), work in the private sector (at economic research institutes, consulting firms, investment banking, etc.), or work for the government (the Federal Reserve banks, Bureau of Labor Statistics, Census Bureau, Social Security Administration, Federal Trade Commission, etc.). There are also lots and lots of economists at international development and financial institutions such as the World Bank,(the Young Professionals (YP) program there is a very cool job; also check out the Young Economists program), regional development banks (Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, African Development Bank Group, etc.), the International Monetary Fund (IMF), and other international organizations (OECD, ILO, WTO, UN). Many business schools also offer doctoral programs. For example, the Wharton School of Business at the University of Pennsylvania has ten doctoral programs: finance, accounting, management, marketing, health care systems, insurance and risk management, public policy and management, operations and information management, real estate, and statistics. These will also prepare your for a career in academics and the public or private sector.

For a sampling of recent jobs available, see the list of job openings, often referred to as "JOE" (Job Openings for Economists), maintained by the American Economic Association (AEA). This is the first place many employers, especially colleges and universities, go to find econ Ph.D.'s. It contains academic, non-academic, and foreign listings. Inomics-JOE has a European focus. UK-JOE emphasizes jobs in Britain. The Chronicle of Higher Education also maintains a job listing. The AEA has its annual conference shortly after January 1st, which is when initial interviews for many jobs take place. A timeline of the job market explains what you should be doing the year before you plan to apply for jobs and what to expect both before and after your interviews at the annual conference.

Should I get a Master's degree in economics? back to top
The Ph.D. is the terminal degree in economics, however many institutions offer a terminal Master's degree (e.g., Miami (of Ohio) University, Delaware, UNC-Greensboro, Duke, East Carolina, Minnesota) which typically requires 12-18 months of full-time study. If you're interested in teaching at a university or college, you need to earn a Ph.D. If you're interested in doing economic research at a government institution or research institute, the Master's may be a good choice. Note that you can, typically, leave a Ph.D. program after one year with a Master's degree in economics.
That said, a Master's degree can enable you to gain a more sophisticated treatment of micro and macro theory as well as econometrics before moving on to a Ph.D. program. By reputation, the best place to go for this "preparatory Master's" is the London School of economics' M.Sc. in Econometrics and Mathematical Economics program. Other good programs, all in Canada, are Queen's University, Univ. of British Columbia, Univ. of Toronto, Univ. of Western Ontario, and McGill. It is not uncommon to see students at top 10 programs with Master's degrees from one of these institutions. If you're interested in financial economics, Princeton has a new Master's in Financial Economics program which is also excellent preparation for a Ph.D. program.

What is the Diploma in economics? back to top
The London School of Economics offers a 9-month Diploma in Economics program which can be a useful way of improving your economic, statistical, and analytical skills before continuing on for a Ph.D.

What about a Ph.D. in public policy? back to top
It is also possible to obtain a Ph.D. in public policy during which time you may be able to take the first and second year Ph.D. economics classes. If you're interested in taking this approach to your graduate education, contact program directors directly (get their contact info from these websites) and then discuss this plan with one of the faculty at Davidson. The top 4 schools for this (according to U.S. News) are Syracuse (Maxwell School), Harvard (Kennedy School of Government), Indiana (School of Public and Environmental Affairs), and Georgia (School of Public and International Affairs). Formerly in Top 5: Princeton (Woodrow Wilson School of Public and International Affairs; the Associate Dean, James Trussell, is a Davidson alum!), and Berkeley (Goldman School of Public Policy). I've heard that some, such as Kennedy, place more emphasis on economics, for which strong math skills will be most helpful.

Should I go directly to graduate school? back to top
Not necessarily. Some students have chosen to work in economic research (Berna Demiralp and Jasmina Radeva at Research Triangle Institute, for example) before applying to graduate school. This can be a good method to see whether you like that type of job and to further develop your quantitative and analytical skills. Plus, it is not uncommon for first-year economics grad students to have worked in the research departments at places like a Federal Reserve bank or other institutions for a couple years. For the perspective on going directly after undergrad, contact Jimmy Roberts at Northwestern. For a perspective on working for 1 or 2 years before going to grad school, contact Jeff Larrimore (Cornell) and Andrew Foerster (Duke), respectively. Finally, anecdotal evidence from the experiences of students i know indicates that a stop at one of the Federal Reserve banks can help one get into better programs, especially relative to non-Fed jobs. I've no idea if it's better to be at a specific Fed before applying, say DC or NY.

How much does graduate school cost? back to top
Tuition and fees will vary greatly by type of institution (public or private) and residency status (in-state or out-of-state). Check with schools of interest for specific numbers. Financial assistance for incoming students comes in the form of tuition scholarships, fellowships, and assistanships (scholarships are not taxed while fellowships and assistantships are). Financial awards range from no aid to full support, with outstanding students receiving fellowships to attend graduate school. These fellowships typically include a scholarship for tuition and health insurance plus a fellowship stipend for living expenses. Note that it is possible to enter a program without any support and then, by excelling in your classes, earn tuition remission and research or teaching assistantships for your 2nd year and beyond. If you are accepted in a program without financial support, ask about their recent experience with students earning support after the first year.
A large cost of graduate school is the opportunity cost of not working during your studies; however, many students find summer employment with consulting firms, economic research institutes, international development agencies, or other companies. These experiences may even aid in the completion of your dissertation. In addition, many programs will offer admitted students research or teaching assistantships, in which the student takes on research or teaching assistant duties in addition to their required coursework and dissertation. Again, these opportunities can carry great benefits such as gaining teaching experience, learning research skills, and developing relationships with faculty members.
You should also consider applying for outside funding in the form of financial aid, grants, and fellowships. Visit the general websites on graduate school and specific resources such as the (Jacob K. Javits fellowships (deadline Oct 15 annually), the National Science Foundation (Deadline: Nov 1 annually), The National Institute of Health, The U.S. Agency for International Development, the Rockefeller Foundation.

What is the average salary? back to top
The "Survey of the Labor Market for New Ph.D. Hires in Economics 2007-08" (Deck and Curington, 2007; click here) reports a mean offer for the 2006-07 academic year of $85,565 for economists at Ph.D.-granting institutions (up from $66,361 in 2000-01) and $65,316 (up from $53,634 in 2000-01) for those at Bachelor and Master-degree granting institutions. Overall average is $76,649.

How hard is it to get into a top program? back to top
The short answer is very, very hard. Econphd.net has a good summary, saying "getting into the best PhD programs appears to be an easier feat in economics than in computer science, physics, and math, but its tougher than just about everywhere else." My guess is that top places are accepting only about 10% (maybe 15). And of course that's 10% of a select sample -- the folks who believe they may well get accepted, i.e., they were very good students.

There is tremendous competition for spots from all over the world now, especially China, India, and the former Soviet republics (okay, so those are large population places, but it's still true). Alan Krueger recently came to give a talk at Davidson and I asked him about the trend toward entering classes in top grad schools (he's at Princeton) being mostly foreign students. The newsletters I get from Yale's department the last couple years indicate that well over half the students are foreign, assuming I'm making the right guesses on marginal names. Prof. Krueger actually did some digging into the data for Princeton and indicated to me that the class distribution by country basically mirrors the distribution of the applicants.

What are the admissions committees looking for? back to top
Basically, this is a signaling problem a la Spence ("Job Market Signaling, QJE, 1973). They can't tell how well you'll do in grad school or how good an economist you're going to be, so they use what they think are pretty strong signals. The application basically has three parts -- objective stats (grades, GRE scores), subjective letters of recommendation, and the personal statement. I don't think the personal statement plays into the accept/reject decision very prominently, so that leaves us with two sources of signals. Now don't mail the statement in (pun intended), do a good job on it (everyone else will) and sound like you know what economic research is, even mentioning your potential area of interest and why.

Grades -- at least a 3.7 to be competitive at top 15 places. Perhaps your overall GPA can be a bit lower if your econ and math GPAs are way high. You really need to demonstrate math skills at a high level. You will need to prove theorems, find equilibria, and solve optimization problems in grad econ theory courses, and serious math is required. Acing all the econ classes and taking only calculus is not going to cut it. See below for a list of math classes I suggest taking. Not taking linear algebra, diff eq, stats, probability, real analysis is a bad signal -- as is taking them and getting B's.

GRE -- I think the quantitative score matters most. Verbal certainly the least. I tell my students that here you basically need to get an 800 to keep yourself in the game. An 800 isn't going to make you look good, just not bad. So study for it and get the 800. Now a 780 isn't a death knell, nor maybe a 760, but my bet is that zero of the first-year students at top 5 places got < 760. An illuminating, true anecdote (i'll leave the names out to preserve anonymity): a student from a large, mid-western, flagship state university applied to a top 5 program. This student had earned A's in every course -- econ and math obviously included (and was a double-major, i think -- i'm not sure about that part). Great letters, solid statement. This student scored 780 on the quantitative GRE. This student was not accepted.

Should I take the GRE twice? I don't know ... if you got 780 on the quantitative, i think it's a tough call, but I'd say "no." I know a student who got into a top 10 place (full ride) with 780 -- and lots of A's in hard math classes. If you got 760, I'd probably take it again since that's got to be pretty far, in terms of standard deviations, away from 800, no doubt the modal result at top programs.

Letters of recommendation -- these are important too, but all the competitive applicants are going to have people write good letters. It's a matter of degree. It will help, obviously, to have someone write you a glowing letter. I think one thing that does matter, which is hard to measure and thus hard to signal, is creativity, or imagination, if you will. Those qualities are needed to come up with a good dissertation, so if a professor can write about those on your behalf that would be good. And of course if you can have a professor who has published lots of paper in great journals say you'll make a good economist, that won't hurt. Let's face it, connections matter -- so if the faculty member reading your application knows and respects your recommenders, that helps. That leads to this special note, which isn't really only for students from liberal arts colleges.

Special note for students from liberal arts colleges:
I've gotten the sense (from looking at entering classes and my students' experiences) that students at Ph.D.-granting institutions have a built-in advantage over students from liberal arts colleges. Why? Because they can take graduate-level courses and eliminate much of the uncertainty for the top Ph.D. program over whether the applicant can handle the first-year courses. In fact, when I once asked a professor at a top program what advice he'd give my students, the answer was: take the graduate courses at your institution. Well, there are none at liberal arts colleges. However, if your liberal arts college is in reasonably close proximity to a place with a Ph.D. econ classes, go take them, and do well. I know this sounds weird -- you're probably thinking, but that's what I'm applying to grad school to go do! Yes, I know, but think about from the school's perspective. Success in a graduate course is a pretty good signal that you can succeed in another graduate course. Now I admittedly don't know how they define "success," so perhaps a B is good enough, and a C is the bad signal. Plus, the topics that are covered and the manner in which they're covered will be different in each graduate micro, macro, or econometrics course, so it's not like you'd be getting *exactly* the same stuff. Another anecdote: a professor from a top-3-ranked liberal arts college had a very good student apply to top econ Ph.D. programs. The student was not accepted at the top places, despite being one of their top majors with very good grades and scores and letters. This professor suggested that winning an NSF grant for graduate study would help a future, disadvantaged liberal-arts-college-student win a spot in a top econ Ph.D. program. Sage advice.

For further details on how competitive it is to get accepted, what the admissions committees are looking for (GRE, GPA, etc.), and how certain departments weigh various admissions criteria, click on the school name: Stanford Minnesota Duke Johns Hopkins Wisconsin-Madison UVa Iowa Univ of Texas-Austin Cornell Univ of Washington. You might also try finding the c.v.'s of current students at your schools of interest to see their background.


Where should I apply? And to how many places? back to top
As for where you should apply, the admissions process is rife with uncertainty, but the familiar strategy of aiming "high, middle, and low" is a good approach. Your outcomes will almost certainly not follow a monotonic path (that's been the experience of students for whom I've written letters in the past 3 years), and you never know when someone at the selection meeting is going to go to bat for you. Throw in the fact that some students will get accepted with full rides, some with partial rides, some with no ride, some with guaranteed TA/RA jobs, and the permutations shoot up. So if you can afford the marginal costs of application fees and time, more is better. As Tom Mroz, my postdoctoral fellowship advisor at UNC-Chapel Hill, sagely told me, and I paraphrase, "what is the marginal cost of an extra application, $3?" He was referring to job applications, but I think the same principle applies for grad school applications.

I think 15 is a good number for a person who thinks they have an outside shot at the top 5 (MIT, Harvard, Princeton, Chicago, Stanford). If you're targeting the top 5, you don't need to be reading this page.Also bear in mind that the job market for economics Ph.D.'s is not geographically homogeneous. That is, the higher the ranking of your program, the more national will be the corresponding job market, ceteris paribus. Please consult with the faculty members to discuss your qualifications and interests.

What are my chances of graduating with the Ph.D.? back to top
Naturally this depends on largely you, your abilities, determination, etc., but it might be interesting to note the statistics from two classes entering top 10 programs in the fall of 1991. Note that these are not conditional on any expected determinants of graduation. Brad DeLong estimates that 60% of the 25 entering students at Berkeley in 1991 graduated (by 1997). He provides a few more details here and also has a page containing "David Romer's rules" on how to improve your probability of graduating. It's really only one rule: just write!

The other class is my entering class at Yale. A few years ago a classmate, Jeff DeSimone, and I sat down and figured out how many of the 27 students who started finished, as far as we knew. We came up with 14 known graduates, and nearly all the others known non-graduates. So a rough estimate of your probability of graduating from a program is in the 50 to 60% range. Re-read "David Romer's rules" now.

Where have recent economics Ph.D.'s found jobs? back to top
Many schools publish where recent graduates from their Ph.D. program found employment. I suggest going to their websites and getting a sense of where their graduates find jobs. Be sure to examine the whole list and not get enamored by the top few hires, as any class is bound to have a "star" or two, so the whole distribution is likely a better indicator of what you can expect (unless you yourself are a "star" :) and you probably wouldn't know that yet!). In addition, the NBER maintains a list of the annual market supply of economics Ph.D.s from U.S. universities. And the "Survey of the Labor Market for New Ph.D. Hires in Economics 2007-08" (Deck and Curington, 2007) has a table of hires too.



What you need to be doing now in preparation for applying ... back to top

1. Recommendation letters
Begin thinking about which of your professors you will ask to write reference letters. These are perhaps the most important part of your application (along with evidence of your quantitative and math skills), ceteris paribus. Your competition will have great letters, so you need to as well. Therefore, you should make a serious effort to get to know your professors, more than just excelling in their classes. Ask about research opportunities with the faculty! And don't hesitate to ask your professors to lunch at the commons; they do get one meal per week free there, when accompanied by a student.
2. Mathematics classes
Graduate school today involves serious mathematics. Your life will be easier the better prepared you are mathematically. Success in the following courses (or their equivalents) will improve your chances of acceptance at a top program. This list has been developed in consultation with faculty at Davidson (based on their graduate experience) and faculty involved in graduate admissions at Yale, Columbia, and UNC-Chapel Hill. If you're not a Davidson student, and happen to be at an institution with a Ph.D. program in economics, I would consider taking the first-year Ph.D. classes at your institution. Success in rigorous, quantitative courses is a great signal.
Some top programs say Linear Algebra is a minimum requirement, but it's really a sub-minimum; if I had to guess the true minimum expected level of math, I'd say through real analysis. If anyone reads this and has another opinion or perhaps some relevant knowledge, I'd welcome hearing it. Consider this quotation from Univ of Minnesota's webpage about Lin Alg being a minimum: "In fact, no student has been admitted in the past several years with training limited to this level of mathematics." With that in mind, here are the courses, beyond the requirements for the Econ major, that I think you should definitely take at Davidson:
In the Economics Department (all the courses for a major, plus ... )
215 Mathematical Economics
317 Advanced Econometrics
In the Math Department
130 Calculus I
135 Calculus II: Multivariable Calculus (130 prereq or 1 year of HS calc)
150 Linear Algebra and Mathematica with Applications (135 prereq or 130 and knowledge of vectors)
235 Differential Equations and Infinite Series
300 Introduction to Proof, Analysis, and Topology
430 Real Analysis (235 and 300 prereqs)
Note that a Math minor is these classes plus one more numbered above 200; I recommend 360. You might as well (at least) minor in Math.
These courses would also be helpful, but are not as essential: (in descending order of importance)
In the Math Department
360 Topology (300 prereq)
340 Probability (135 prereq)
341 Mathematical Statistics (340 prereq)
335 Vector Calculus and Partial Differential Equations (235 prereq)
450 Advanced Linear Algebra (355 prereq)
Please note that if you have some idea of what area of economics you wish to do research in, certain classes will be more useful than others. The faculty can help you tailor your schedule depending on your future plans. For example, a budding theorist will want to take Probability, Mathematical Statistics, and Real Analysis.
3. Graduate Record Examination (GRE) Sign up to take the GRE no later than October of your senior year and possibly a test preparation class. Check each program's requirements carefully. Applications for the fall semester are generally due in early January with admission decisions mailed in mid-March and your choice due by mid-April.
Anything less than a 780 on the quantitative section will make it much harder to get into a top 10 (top 20?) program. I have also heard that the verbal section is becoming more prominent in the admissions decisions of top programs, to a degree that dual 800s are not "rare." My interpretation of this is that < 800 quantitative is now "rare" and the admissions committees need a new variable to separate applicants.
4. Contact current faculty at prospective programs who have research interests similar to yours. This is generally done after getting accepted (and many departments organize visits for accepted students), but if you can somehow swing a research assistant job the summer after your junior year with a faculty member at a Ph.D-granting institution, that would be terrific. Let's face it -- sometimes knowing the right people helps, and the Davidson faculty do not have many direct contacts at top 20 Ph.D. programs. Plus, while you may not have a specific idea of what you want to write your dissertation about (which might lead you to go to school X because professor Y, the expert in topic Z, works there), a conversation with a professor at your desired school can greatly inform your decision on where to go. Such contacts may also lead to Research Assistant (R.A.) or Teaching Assistant (T.A.) positions once you matriculate.