A puzzle in recent years has been the decision of so many Australian undergraduates to flock to business degrees in favour of economics degrees (one quarter of undergraduates are now studying business). This is despite Australian research by the University of Canberra’s Phil Lewis, Anne Daly and Don Fleming showing that economics graduates earn more than business graduates. From my (biased) perspective, this is a problem, since I regard the skills learned in economics as broader and more powerful than those learned in business. But the student market clearly believes otherwise.
It turns out that this is also an issue the UK is facing, and Ray Bachan (U Brighton) has a new paper out suggesting that one factor is that the chance of passing business is higher than the chance of passing economics. He also finds that women and ethnic minorities prefer business to economics – though of course, this only takes us one step closer to pinpointing what’s going on. His abstract:
This paper uses ALIS data to model the factors that influence the choice between Economics and Business Studies A-level. These subjects are often perceived as close curriculum options and possible substitutes in the UK. Subject choice is modelled using an underlying latent variable approach, which employs both a binary and an ordered probit. On the basis of a series of counterfactual exercises an overall average grade differential, a measure of their comparative difficulty in terms of students expected examination performance, is estimated to be 0.7 of an (old) UCAS point. The estimating equation suggests that a unit increase in the grade differential increases the probability of selecting Business Studies over Economics by approximately 16 percentage points. There is evidence that females are less likely to choose Economics over Business Studies, and the more able students, in terms of their average GCSE score and mathematical ability, are more likely to select Economics. There is little evidence of parental background characteristics exerting significant effects on the choice between these two subjects, but there is evidence of ethnic characteristics being significant.