The best college majors for business

One of the most daunting tasks college students face is the choice of a major. When students seek advice from counselors, they are often told to "follow their passions," on the theory that the choice of a major has little impact on future success. Students are often told that the most important thing is "critical thinking" and "communication" skills, and that all college majors prepare students for success in these ways.

Yet a forceful minority in education has long claimed that there is something special about STEM (Science, Technology, Engineering, and Mathematics) majors that uniquely prepares students for success. STEM advocates argue that the rigor of a STEM education better prepares students for the skills that are most in demand in a modern economy. Still, sometimes students resist this, thinking that with a STEM education they will be "locked into" a job in a laboratory, without the opportunity to advance into broader endeavors.

One way of testing this proposition is to look at the leaders in the world of business, where the bottom line depends on hiring the best talent and where the (monetary) rewards are highest. This post examines the most visible and arguably prestigious slice of business leaders--the directors and senior executive officers of publicly traded companies. Combing through this data to extract the college majors of officers and directors may give some insight into which college majors are most valuable in the long term. 

The results of this data collection, summarized below, are unequivocal. All majors do not lead to the same level of business success, and STEM graduates are not "locked in" to technical careers; indeed, STEM majors outperform virtually all other majors in the business world by a large margin. Perhaps counterintuitively, the best major for success in business clearly is not business administration. The top majors for success in business are engineering, science, mathematics, economics, and accounting.

Rank	bachelor’s degree major category	execs per degree	total execs count	total degrees awarded --
1	petroleum engineering	0.4435	177	399
2	mining engineering	0.1356	32	236
3	economics	0.0845	2089	24736
4	engineering science and physics	0.0621	26	418
5	chemical engineering	0.0548	317	5786
6	physics	0.0525	228	4340
7	geology	0.0504	174	3449
8	industrial and mfg. engineering	0.0498	194	3896
9	chemistry	0.0433	467	10794
10	accounting	0.0355	1630	45868
11	engineering (General)	0.0314	266	8465
12	agricultural and biological eng.	0.0308	20	648
13	materials science	0.0278	28	1007
14	mathematics and statistics	0.0269	392	14549
15	electrical engineering	0.0261	485	18615
16	mechanical engineering	0.0237	375	15797
17	aerospace engineering	0.018	44	2444
18	metallurgical engineering	0.0147	14	953
19	civil engineering	0.0131	143	10943
20	political science and government	0.0129	637	49270
21	business admin. (minus accounting)	0.0128	3007	234378
22	computer engineering	0.0127	35	2746
23	nuclear engineering	0.0119	5	421
24	history	0.0119	300	25269
25	biology	0.0095	705	74031
26	philosophy	0.0088	89	10147
27	environmental engineering	0.0074	5	674
28	biomedical engineering	0.0058	19	3256
29	computer science	0.0055	224	40992
30	english language and literature	0.0038	195	50991
31	ethnic, cultural & gender stud.	0.0037	24	6481
32	foreign languages and lit.	0.0029	52	17903
33	psychology	0.0025	189	76174
34	communications and journalism	0.0021	129	60236
35	other liberal arts and humanities	0.0018	66	36737
36	anthropology	0.0016	13	8154
37	architecture	0.0014	13	9145
38	sociology	0.0013	37	27672
39	pharmacy and other health prof.	0.0013	113	88389
40	public administration	0.0013	25	19951
41	criminal justice, criminology	0.0008	22	28890
42	agriculture	0.0005	12	22355
43	education	0.0005	54	111094
44	visual and performing arts	0.0004	25	68120

 

The results of the ranking are very similar to the one published by Payscale of the highest-paying college majors. The dominant majors in senior business leaders are science, mathematics, and engineering, together with economics. Indeed, science, engineering, mathematics, and to a lesser extent economics majors probably actually do significantly better than this table suggests, because many of the degrees awarded in these areas are to foreign students who return home after college, and therefore do not become leaders in U.S. companies, even though they are counted in the degree totals.

Don't be fooled by studies that claim that liberal arts majors as a group "close earnings gaps" or "outearn" other majors, such as the "study" out by the Association of American Colleges and Universities. Such reports come to this result by aggregating degrees in a way that boosts "liberal arts" majors on the one hand and dilutes "professional" degrees on the other. In particular, they boost liberal arts by mixing economics, which fares very well in terms of future earnings, with other social sciences such as sociology and humanities such as English, which fare abysmally. They dilute the  "professional and pre-professional" category by mixing accounting and actuarial science, which do very well in terms of future earnings, with education, communications, and criminal justice degrees, which do not. These studies don't spend much time comparing with engineering, because there is no comparison.

The bottom line is that you should probably know what e ^{i π} equals when you graduate from college. Any type of engineering or mathematics, as well as most types of science, outperform virtually all liberal arts (and other) degrees. But not all liberal arts degrees are the same; economics is the best performer among common college majors, and may even outperform most types of engineering. But the hundreds of thousands of degrees handed out in communication, English, sociology, criminology, education, psychology, and the like do not appear to lead to business success. Of course, these degrees have their own instrinsic merits and may lead to other types of success, but students should not be led to believe that all majors can lead to the same type of success.

It is true that not everyone can complete a STEM major, because such majors are rigorous and some students who work hard will actually fail. Some people who fall in this category should not be going into debt to go to college at all. The remainder may wish to consider accounting, economics, and even political science, all of which have respectable showings on this list. However, students should remain aware that choosing a liberal arts major may require graduate education such as a JD or MBA (and much, much more debt), whereas an engineering major is likely to lead to a successful career with nothing more than a four-year degree at an affordable state school.

If you're reading this too late to change your major in "puppetry arts" to petroleum engineering, you may soon be looking to launder your degree with a law degree. In that case, you will want to see my JDs in the Boardroom ranking, which ranks law schools using the same approach as this ranking.

Methodology Note: The data here are collected from disclosures in proxy statements and annual reports of publicly traded companies drawn from the Securities and Exchange Commmission's EDGAR system. The rules of the Securities and Exchange Commission require companies to provide the "business experience" of directors and executive officers (D&Os) in either their annual reports or proxy statements, which sometimes includes colleges attended and degrees awarded. I collected a sample of such data on college majors from proxy statements and annual reports filed by publicly traded companies. I used a computer script to automatically extract most (but not all) college majors listed in the proxy statements or annual reports of publicly traded companies for the year ending September 30, 2014.

Comments

[Nathan A.]

"Science, engineering, mathematics, and to a lesser extent economics majors probably actually do significantly better than this table suggests, because many of the degrees awarded in these areas are to students" WHO (A) HAVE LITTLE TO NO INTEREST IN PURSUING A CAREER OUTSIDE RESEARCH/ENGINEERING, AND (B) HAVE THE ABILITY TO EARN A GOOD LIVING OUTSIDE OF BUSINESS. Neither of these are true for business majors.

You forgot a couple more reasons why these numbers underestimate how well STEM backgrounds might prepare people for a career in business. :)

[Rob Anderson]

Nathan, I agree completely. In addition, my guess is that the factor you mention is the primary reason why economics and accounting do better than some of the STEM majors.