Master of Finance or Master of Economics: What’s The Difference?

Graduate students interested in furthering their education following their bachelor’s degree studies in business have multiple options. Many in the academic world are particularly concerned with a choice between a master’s in finance or master’s in economics. While these degrees tend to have quite a bit in common in terms of topics and structure, they diverge in important ways. Plan to research thoroughly and choose the master’s degree program that fits your goals.

The Difference Between Finance and Economics

First, it’s important to know that finance and economics represent two distinct, though closely related, fields of study. Economics is generally considered the foundation for most topics related to finance. While students in undergraduate or graduate business programs will learn about important topics from a range of fields, every business degree will require some level of economics knowledge.

At the same time, the career outcomes are much different depending on the field of study. Finance is often considered the concentration with more practical applications. Pursuing a master’s degree in finance can serve as a stepping stone to analyst or financial advisor roles, as well as certification as a financial planner, for example. On the other hand, those who choose to pursue advanced degrees in economics tend to find more opportunities in academia or public policy. After all, economics is a social science at its core, but that doesn’t mean there are not practical applications for economic research, including in finance or business management.

In addition, many bachelor’s degrees in business, or advanced yet generalist degrees like the master’s of business administration, allow students to select a concentration in finance. This is a reflection of the degree to which financial studies permeate the professional world, and find use in a wide variety of different careers.

Which One Should You Choose?

In the end, choosing between a master’s degree in either finance or economics depends largely on your interests and the ideal outcome of the program. According to Investopedia, students with a strong grasp of quantitative analysis are often the best fit for advanced degrees in business other than an MBA. A master’s degree focused on finance will involve more details related to how mathematics concepts are applied to fields like investment banking and financial analysis. A master’s degree in economics will feature a strong quantitative component as well, but with a focus on applications for research and policy. Economics often gets more abstract at higher levels, while finance tends to get more technical and granular. For this reason, students with an advanced degree in the science of finance may find more career opportunities in the private sector – high-level research from economic scholars often trickles down to financial professionals gradually yet broadly, providing more possibilities for those skilled in finance to succeed in many roles.

The choice between finance and economics might also depend on your plans for future qualifications in the business and financial world. The Chartered Financial Analyst (CFA) program is among the most well-known professional certifications in the corporate world, and represents a logical final step for many finance specialists. According to the CFA Institute, which administers the CFA program, a majority of CFA holders go on to careers in portfolio management, as a research analyst, or a chief executive. The curriculum and requirements of the CFA program emphasize a background in finance, but economics remains a core competency for the program, too. Many MSF degree programs will prepare students specifically for the CFA exams, making them strong candidates for CFA certification.

Another contributor to Investopedia argued that an advanced finance degree “opens more obvious doors” to career paths outside of academia, where most scholars of economics end up. Most of the people working in global financial centers in New York City or London are those concerned with the scientific study of finance. That includes those working as analysts, fund managers and personal financial advisors. Most roles sought out by commercial or investment banks, as well as insurance firms, also pull from a pool of graduates who studied the science of finance. As with many careers, those who have attained a higher level of education through a master’s degree tend to be faced with stronger job prospects.

Economics vs. Finance in The Private Sector

People with an advanced educational background in economics can now be found working alongside those with similarly high levels of academic attainment in the study of finance. Economists are well-represented among the ranks of investment bankers, financial consulting firms, and other organizations that rely on high-quality insight into future economic growth rates, inflation, interest rates and the like.

While economists are often skilled at assessing the risks and opportunities presented by future events, experts in finance are primarily concerned with the present. A key component of most roles in the financial sector is determining the fair value of an asset like stock shares, bonds or real estate. Financial analysts are constantly working to understand market behavior and devise strategies to act on that information. In general, it’s the people with a background in finance who are putting into practice the latest findings from economists, which makes an advanced finance degree more enticing to many.

If you are trying to decide between studying economics or finance as you look to advance academically or to further your career, it’s important to trust your judgment and keep in mind your desired career otucome. Remember that although these two fields of study have much in common, they each play well-defined roles in different career trajectories. The Online Master of Science of Finance Program from Northeastern University’s D’Amore-McKim School of Business can be an excellent next step in your career if you are interested in advancing your expertise in the field of finance and learning how to adapt to the shifting global financial landscape.

 

Sources

Investopedia – Finance and Economics

CFA Institute – CFA Charter Factsheet (PDF)

Investopedia – Finance and Economics Careers