What Is the Difference Between a Degree in Economics and a Degree in Finance?

There are key differences between finance and economics degrees. But there are also significant similarities. While both an economics and finance degree concern money and the general economy, they result in fairly different career directions. Finance degrees focus on markets, corporations, and individual finances. Economic degrees can have a very limited focus on either microeconomics or macroeconomics. Still, the disciplines of economics and finance share some common courses and educational requirements. Plus, they both require higher level analytical thinking skills.

Academic Branches of Finance and Economics


Difference Between a Degree in Economics and a Degree in Finance

Finance and economics degrees can be divided into major branches. Finance degrees may focus on public, personal, corporate, and government finance. Personal finance manages individual savings, budgets, planning, and risk management at the family unit level. Corporate finance revolves around capital structure, managerial accounting, and shareholder value. Public finance focuses on the role of the government’s revenues and expenditures in the economy. It generally teaches finance students how to become financial professionals in a government agency as opposed to the private sector.

In contrast to a finance degree, economic degrees can focus on national or domestic microeconomics and macroeconomics. Macroeconomics is the big picture study of the performance of the national or global economy. This type of economics degree deals with complex issues like:

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  • labor
  • income and output
  • market conditions
  • economic sector correlations
  • risk management

A micro-economics degree focuses on individual businesses and households. It helps consumers make informed decisions on how they divide, achieve, and manage their resources. Other fields that involve economics are personal finance, behavioral economics, and infrastructure.

Finance Degrees, In General

Unlike economics, finance degrees teach students about making, managing, and quantifying money. Future finance professionals learn about the fundamentals of bonds, commodities, and investment vehicles. Assignments and discussions for finance students may cover various subjects. Examples include interest rates, market evaluations, price trends, and risk quantification. Other common class topics for prospective financial analysts will be:

  • liability minimization
  • risk management
  • corporate assets
  • quantitative finance
  • accounting with business financial statements
  • financial statement analysis
  • portfolio management
  • financial planning
  • financial management
  • investment analysis
  • investment banking
  • statistical analysis

After graduation, the finance professional will address key issues that financial managers and financial advisors face every day. Some examples include firm valuation and capital budgeting. Other common classes for aspiring finance professionals include professional ethics, regulatory environments, and corporate social responsibility in the finance sector.

For example, a class on corporate finance may introduce students to long-term investment topics. Students will understand how to make the best capital budgeting and structure decisions for optimal portfolio management. These finance programs often focus on applied planning, strategic models, and managerial decision-making. After a spell in the professional financial field, many financial advisors and other finance professionals seek a master’s degree in finance or a Master of Business Administration (MBA) with a specialization in finance. The master’s degree in finance is a highly specialized professional degree that can be completed in about a year. An MBA is a type of master’s degree that requires a multi-year commitment. This latter type of master’s degree is more general in its approach to the subject at hand (business). The specialization is then built onto that framework to accommodate finance students. 

Economics Degrees, In General

An economics degree will present economics as the financial framework that houses certain political, legal, and social aspects and systems. They help economics students better understand, analyze, and take action on certain aspects of these interrelationships. Economics is a social science, not a hard science. That’s because there are so many variables. Plus, many of these variables are individuals who do not always act rationally. Thus, economics students learn how to use factual observation, academic research, and empirical exploration to produce reliable data and reports. Economics graduates will understand the various theoretical schools of economic thought. This will help them gain analytical, interpretive, and scientific skills. This is the skillset needed to become an expert consultant, decision-maker, and thought leader. Classes on macroeconomics will look at concepts like:

  • market structure
  • failure
  • resources
  • economic development
  • econometric analysis

Classes on microeconomics will cover:

  • static models
  • consumer behavior
  • distributive efficiency
  • financial modeling

But an economics degree will cover a lot more than just macro and micro. Positive economics (“what is”) and normative economics (“what could/ought to be”) comprise a large part of undergrad economics studies. Other components of the curriculum for economics majors span the history and current state of economic theory. The successful economics student will take the theories they have learned and put them into play using applied economics. People who wish to pursue economics as a career can finish their bachelor’s degree and go on to graduate school. In terms of educational requirements, a master’s level credential or a PhD is recommended for those who wish to teach the subject at the college level. 

Choosing between the two disciplines of economics and finance is difficult for some students. That’s because finance and economics appear similar. Still, some differences can lead to very opposite career paths. But there are also cases of finance degree holders and economics degree holders sharing cubicles and doing very similar work. So the fields of economics and finance also overlap in a few areas. Anyone who likes helping people and companies manage their money (think retirement planning) should select a finance degree. Likewise, anyone who enjoys analyzing policies and trends in global markets should study economics. Readers can further explore business and financial occupations with backgrounds in both economics and finance.

Finance and Economics Degree Analysis: a Deeper Dive

Let’s explore finance and economics at a deeper level. Called “the dismal science” by detractors, economics can appear to be dry and dusty. It calls to mind images of fussy old men in a room calculating GDP and GNP with an abacus. But, it can also be critical and lifesaving. Think healthcare economics or even areas of personal finance and risk management. Economics distills the decision-making process. It allows the absolute best decision to be made based on available evidence and data. And who doesn’t want to make better decisions? Being able to decide in a reliably methodical fashion is a skill that would benefit all individuals, regardless of their walk of life. 

Difference Between a Degree in Economics and a Degree in Finance

Personal finance is an area where economics and finance overlap. Let’s explore this finance vs economics Venn diagram further to tease out the differences in these two fields. Economics is a discipline that approaches this area as a way to help you make the best decisions with limited resources. It also helps individuals navigate complicated systems to the best advantage. People tend to think that economics is all the business of the government and deals with large systems. Still, these people forget that the field of microeconomics exists. Microeconomics and that is expressly for small financial markets and even individuals. That said, when people need financial advice, they do not start looking at Google reviews on economists in their area. Instead, they roll up to the bank and see their helpful financial professional. Economists tend to be employed in the public and nonprofit sectors and by universities. 

In contrast to economics, finance programs approach personal finance from the opposite end. This field tends to represent the banks and their interests, which are sometimes in your personal interests and sometimes not. Professionals who specialize in personal finance will help individuals in need of advice. But at the end of the day, the bank signs their paychecks, so be aware of a possible conflict of interest. 

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Aside from personal finance, the academic discipline of finance covers two other main areas. These are corporate finance and public finance. Public finance deals with how taxpayer money is spent. Corporate finance deals with privately-held money and gives birth to the financial services sector. This sector allows the movement of the capital from job creator to employee to service provider and so on. Other areas of study include financial economics, experimental finances, financial mathematics, behavioral finance, and financial theory. 

Financial economics involves the relationship between financial instruments like rates, prices, and dividends and the general economy. Experimental finance researches economic theories and tests their validity. This is accomplished through data collection and experimental observations. Financial theorists work with the question of whether finance is a science or more of an art. This debate still rages, so theoretically, (ha!) this field is still hiring. Financial mathematics is a sub-field of applied mathematics. It is concerned with markets and trading. Behavioral finance deals with the decision-making processes of people who work in finance and people who deal with finances. 

Financial analysts, budget analysts, financial planners, and financial managers work in many areas, including the public and private sector. Indeed, criminal justice leadership is a growing area of finance specialization. So just because you have a bachelor’s degree in finance (or even a master’s degree!), you need not think you are tied to the banking sector for life. Cities, universities, consulting firms, and non profits will all need financial analysts focused on the bottom line. 

Difference Between a Degree in Economics and a Degree in Finance

As we have seen, economics majors can be concerned with things as they are and things as they could be. This contains the current system, possible improvements upon it, and alternatives. 

Behavioral economics is also a very interesting field of study that attracts many people. This discipline is marked by the inspection of decision-making by people and institutions. It also involves how those decisions and their effects resound with classical economic theory. Since people are not always rational actors, this field draws on psychology and other social sciences as well. Other fields of economics (besides micro and macro) include the following:

  • labor economics
  • developmental economics
  • international economics
  • welfare economics

Economics is decidedly a social science. There is no debate about whether the discipline is an art or a science. Welfare economics is the study of the effectiveness of the allocation of resources by an institution or government. Developmental economics looks at the sociological-political factors that affect developing economies around the world.

If you pursue a bachelor’s degree in economics, one of the first decisions you will make will be to pick a track for your studies. Do you pursue a Bachelor of Arts or a Bachelor of Science in this discipline? The BA will have you study things like the history of the field and involve less technical (math) skills. Generally, a BA will set you up to be ready to pursue an economic-related career upon graduation. The BS will be more technical and prepare the student for further study in the field. 

Difference Between a Degree in Economics and a Degree in Finance

Some economics-related job possibilities would include the following:

  • data analyst
  • actuary
  • economic researcher
  • financial planner
  • investment bankers
  • financial modeling
  • roles in the public sector
  • budget analysts

The US Bureau of Labor Statistics predicts the economic jobs will grow by 14% in the next ten years. This is much faster than the national average for all occupations. Strong analytical skills are a must for any position in this field. 

Finance majors provide fewer options for those starting out. Plus, it must be pursued as part of a business-related degree. Schools quantify those in different ways, as a BA, a BS, or a bachelor of business studies (a BBS). This classification depends on their departmental preference and makeup. When pursuing a degree in this discipline, you’ll need to call upon certain skills to meet educational requirements. Some of these include your facility with numbers and your ability to absorb complicated ideas. You’ll also need a combination of hard skills like math and accounting and soft skills like management and crisis avoidance/mitigation.

In the next five years, finance-related employment opportunities are expected to grow by eight percent. Finance professionals make an average salary of $76,570. That’s according to 2021 numbers from the Bureau of Labor Statistics. Some possible career paths for finance degree holders are:

  • budget analyst
  • investment advisor
  • financial planner
  • credit analyst
  • financial auditor
  • insurance underwriter
  • financial analyst

In-depth knowledge of the needs of the geographic region you serve is expected to be a key desirable skill in prospective employees. 

As we have seen, finance vs economics is not a topic that is cut and dry. That’s because the fields of economics and finance are not mutually exclusive. And they are both solid paths to secure employment. There is much overlap between economics and finance, and they complement each other in many ways. A finance professional such as a financial analyst who sees the larger economic picture would definitely have some benefits. Being an economist with a deep understanding of how policy affects corporate and personal bottom lines would, as well. But there are some major differences. The final choice resides with you, the student. And hey, there’s always the double major of finance and economics (or economics and finance!), right?

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