Miles and Noah: The Complete Guide to Getting Into an Economics PhD Program
Personally, I would rather read Noah’s blog than any other blog in cyberspace. That brilliant style shows through here; I think I managed not to spoil things too much in this column.
In case you are curious, let me say a little about the financial costs and benefits of an economics PhD. At Michigan and other top places, PhD students are fully funded. Here, that means that the first year’s tuition and costs are covered (including a stipend for your living expenses). In years 2 through 5 (which is enough time to finish your PhD if you work hard to stay on track), as long as you are in good standing in the program, the costs of a PhD are just the work you do as a teaching assistant. So there are no out-of-pocket costs as long as you finish within five years, which is tough but doable if you work hard to stay on track. Tuition is relatively low in year 6 (and 7) if you can’t finish in 5 years. Plus, graduate students in economics who have had that much teaching experience often find they can make about as much money by tutoring struggling undergraduates as they could have by being a teaching assistant.
When a school can’t manage full funding, the first place it adds a charge is in charging the bottom-half of the applicant pool for the first year, when a student can’t realistically teach because the courses the grad students are taking are too heavy. That might add up to a one-time expense of $40,000 or so in tuition, plus living expenses.
On pay, the market price for a brand-new assistant professor at a top department seems to be at least $115,000 for 9 months, with the opportunity to earn more during the summer months. If you don’t quite make it to that level, University of Michigan PhD’s I have asked seem to get at least $80,000 starting salary, and Louis Johnston tweets that below-top liberal arts colleges pay a starting salary in the $55,000 to $60,000 range. But remember that all of these numbers are for 9-month salaries that allow for the possibility (though not the regularity) of earning more in the summer. Government jobs tend to pay 12-month salaries that are about 12/9 of 9-month academic salaries at a comparable level.
There is definitely the possibility of being paid very well in academic economics, though not as well as the upside potential if you go to Wall Street. For example, with summer pay included, quite a few of the full economics professors at the University of Michigan make more than $250,000 a year. (Because we are at a state university, our salaries are public.)
The bottom line is that the financial returns are good enough that you should have no hesitation begging or borrowing to finance your Economics PhD. (Please don’t steal to finance it.)
What about the costs of the extra year it might take to study math the way we recommend? If you have been developing self-discipline like a champion, but are short on money and summers aren’t enough, you could spend a gap year right after high school just studying math, living in your parents’ house at very low cost; most colleges will let you defer admission for a year after they have let you in.
Update
I liked this comment that Kevin C. Smith (an MD) sent to Quartz:
Great advice!
I almost flunked Grade 8 because my math was so bad [back in the day they would flunk you for that, at least in Alberta.]
I wound up heading for medicine. A friend who was a few years ahead of me warned: “You’ll never make it if you are not good at math!”
I hired a math tutor in August [before University started], and did every question at the end of every chapter in every one of my text books. I couldcall my tutor when I got stuck [God bless her, wherever she is in the world today!] Math got to be fun after a while [like being really good at solving puzzles.]
You might add to you list of suggestions: hire a tutor do all the questions in all your textbooks
Long story short, I won the Gold Medal for Science, and have found that a really good grasp of math has helped my enjoyment of the world and of my work a lot.