Economics vs Finance
Hi, I am currently in year 12 exploring the courses I want to do at uni. I am indecisive between economics and finance so one of the questions I have is which course is usually harder to get into? Also I get a feeling that finance is more specific than economics in a sense that economics seems to be more broad and socially-philosophical whereas finance looks like its more about stuff that actually becomes more useful and practical like investing etc. Am I somewhat correct?
Original post by nikoraj
Hi, I am currently in year 12 exploring the courses I want to do at uni. I am indecisive between economics and finance so one of the questions I have is which course is usually harder to get into? Also I get a feeling that finance is more specific than economics in a sense that economics seems to be more broad and socially-philosophical whereas finance looks like its more about stuff that actually becomes more useful and practical like investing etc. Am I somewhat correct?
As someone who has studied this in quite a bit of detail and have degrees in both subjects, it really depends on your perspective.
which course is usually harder to get into?
Arguably economics, because you don't have finance degrees for bachelor's at some of the top end universities, but you get plenty for economics.
The entry requirements for both subjects is the same: A Level maths + 2 other A Levels of your choice so long they are all at high grades. A Level further maths is strongly recommended if you can opt for it.
I get a feeling that finance is more specific than economics in a sense that economics seems to be more broad and socially-philosophical whereas finance looks like its more about stuff that actually becomes more useful and practical like investing etc
I would agree that economics is more broad and more philosophical/abstract than finance, but whether you find the stuff in finance useful is another matter. Finance in itself isn't particularly niche, since you do get a broad spectrum of areas to specialise in.
Specialisms in economics can include: staight economics (highly recommended), industrial economics, business economics, mathematical economics (highly recommended if you can stomach it), econometrics, banking economics, financial economics, behavioural economics, agricultural economics, economic history, experimental economics, real estate economics, PPE, public policy, health economics. You then get a few rarer specialisms such as economics of education and economics of biology. You can count on a lot of the material here to be abstract.
Specialisms in finance can include: actuarial science, business finance, financial engineering, computational finance, quantiative analysis, accounting and finance, straight finance, public finance, cryptocurrency, financial management, investments, financial mathematics. The list is shorter than economics. However, you don't need a degree in finance to work in finance; you would often need a specific professional qualification in order to work in the sector (and only a handful of degrees actually help you work towards the qualification, the others are for you to progress onto academia).
Whilst I would say you would pick up more practical skills in finance degrees, I wouldn't say they would help you that much in the real world (partly because I disagree with a lot of the premise of the tools they give you). A lot of the material in both subjects are very theoretical and are more reliant on mathematical modelling; as you would soon realise the real world doesn't always reflect a number of the mathematical assumptions that are used in a number of the models and theories in either subjects; application is always a notch more complicated.
See the following for example:
https://www.youtube.com/watch?v=YYQXPnbWnaM
https://www.youtube.com/watch?v=hV9rFwwAMxI
https://www.youtube.com/watch?v=JH8-mgmAIsw&t=146s
Just note, if you intend to work in finance, you would need the appropriate qualification for the specific role in finance (there are dozens of them out there). Most of these qualifications won't require you to have a degree (or even any qualifications) to get them, and those that do often require a degree in any subject (CFA) or one that is very quantitative (CQF, IoFA) e.g. physics, engineering, maths; in your scenario, probably something in financial engineering, mathematical economics, financial mathematics. There is only one type of qualification that would specifically require A Level Maths as an entry requirement, and that's in actuary (IoFA). If you want to work in the finance industry, you would need to be very specific about the role that you want to work in. If you want to be a finance professor on the other hand, you would need a degree in finance.
If you want to become an economist, a straight (quantitative) economics degree (will ask you for A Level maths, and possibly further maths on top) would often help, but you can also go for the degree apprenticeship via the Bank of England (which should unsurprisingly ask for A Level maths).
I follow specific investment philosophies, so I don't go by the efficient market hypothesis premise used in a lot of the financial theories and tools taught in university material. Even if I use algorithmic and quant trading, the premises of my models and strategies won't be based on such hypotheses either.
Having said all the above, you could always opt for a degree in financial economics (an economics degree that looks into financial topics) or in finance and economics (a degree half in finance and half in economics), banking and finance (half banking economics and half finance), or money, banking, and finance (half economics in banking and money, half finance). Do note that some finance and economics degrees would be more focused on accounting, and hence would be less mathematical than others that covers a lot on financial mathematics and economic topics.
Accounting on the other hand is a useful tool to have, but it's often quicker and more economical (no pun intended) to do the professional accounting qualification as oppsed to doing it as a degree.
Original post by nikoraj
Wow Max thanks a lot didn’t expect such a detailed response. You explained what i needed to know very clearly, helps a tonne.
Let me know if you would want specific books to read from to learn the useful material in either subjects. There are some good ones out there, and they should be considered essential reading for life skills and essential knowledge (despite a lot of it being theoretical and have limited applications).
I think i’ll stick to economics for now because as you said a lot of careers in finance don’t require a degree so it seems less useful. Recommendations of some useful books would be most welcome, i’ve been looking for some good ones to extend my knowledge. Also is it that if i choose to do a BSc in just economics i can then in third year specialise in e.g. financial economics or whatever i prefer?
Original post by nikoraj
I think i’ll stick to economics for now because as you said a lot of careers in finance don’t require a degree so it seems less useful. Recommendations of some useful books would be most welcome, i’ve been looking for some good ones to extend my knowledge. Also is it that if i choose to do a BSc in just economics i can then in third year specialise in e.g. financial economics or whatever i prefer?
Recommendations of some useful books would be most welcome, i’ve been looking for some good ones to extend my knowledge
•
Schaum's Outline of Mathematics of Finance, by Petr Zima and Robert L. Brown (will contain the crucial mathematics of finance that you would find useful for investments, mortgages, debt finance, etc.; you should be able to do most if not all of the maths in a finance degree with this book alone)
•
Mathematics for Economics and Business by Ian Jacques (maths you would need for economics or business/finance - good book if you haven't done further maths but done at least A Level Maths)
•
Schaum's Outline of Introduction to Mathematical Economics by Dowling, Edward (good introductory book on how to apply A Level Maths in economics; will be useful if you decide to pick Mathematical Economics modules, which are usually challenging; if you want to see how the maths is applied in economics, then this is a good book to start from)
•
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing by Burton Malkiel (classic reading for finance)
•
Pretty much any textbook by Gregory Mankiw (good introductory books on economics; he's a good author, and probably a favourite of economics students; I would hold back on buying one until your first and second years because they might be essential text for your degree)
•
Basic Econometrics by Damodar N. Gujarati (this is my go to for econometrics/statistics for economics; it should be an essential text for your degree, but if it's not, it's definitely a go to)
•
The Freakanomics series by Stephen J. Dubner and Steven Levitt (it's a fun application of economics in unusual circumstances; I wouldn't use the information to quote in your assignments and essays though)
•
The Undercover Economist by Tim Harford (another fun book on seeing economics in different circumstances, but more conventional than Freakanomics)
•
Corporate Finance: Principles and Practice by Anthony Head and Denzil Watson (my favourite textbook on corporate finance; most finance textbooks can be long and very very dry. This is a fun read; recommend looking in this book if you have finance modules in your degree)
•
Books by Peter Lynch and Mary Buffett - for an alternative in investment philosophy and approach
•
The Intelligent Investor by Benjamin Graham (a classic text for finance, and the mentor of Warren Buffett - most of the information is out of date though according to a number of authors, but some of the principles are still good)
•
Books by Michael Lewis and Jordan Belfort - for insight into the finance industry and things you shouldn't do
I am currently looking through books on quants and stochastic calculus for finance and more advanced books on mathematical economics; they take maths, economics, and finance onto another level. I don't know which area of finance you intend to go into (if you decide to at all), so I can't comment on which books you should read more into.
if i choose to do a BSc in just economics i can then in third year specialise in e.g. financial economics or whatever i prefer?
It depends on the degree; you will need to check the options and how they decide your specialism. Normally in a straight economics degree, you get to pick your modules, so you can end up picking all the finance related modules should you wish.
Do note, banking/money economics is not the same thing as financial economics - banking/money economics don't cover finance theories or techniques.
Original post by nikoraj
Wow Max thanks a lot didn’t expect such a detailed response. You explained what i needed to know very clearly, helps a tonne.
What did you decide? I am in the same position!
Original post by bestofbritish
What did you decide? I am in the same position!
I ended up going with economics. I felt like it was more interesting to me and more open to different careers.
Original post by nikoraj
Hi, I am currently in year 12 exploring the courses I want to do at uni. I am indecisive between economics and finance so one of the questions I have is which course is usually harder to get into? Also I get a feeling that finance is more specific than economics in a sense that economics seems to be more broad and socially-philosophical whereas finance looks like its more about stuff that actually becomes more useful and practical like investing etc. Am I somewhat correct?
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