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Getting rich quick: Is studying economics the key to a high salary?


‘Learn about economics if you want a big salary’. Just one of the headlines we’ve seen in the media in recent times about the returns from a degree. Back in 2016, research carried out jointly by Cambridge, Harvard and the IFS using matched student loan records with tax data, revealed big variations in earnings by subject and amongst different universities.

Indeed, over the past year, the debate over the value of a degree and student choice has once again been cast into the spotlight, given the focus on the undergraduate fee system coupled with the release of the brand new longitudinal educational outcomes (also known as LEO) dataset. This links together education records with benefits and income data, enabling the analysis of how earnings vary by factors, such as course and provider. As a result, the high salaries of economics graduates has been well documented. Some may conclude therefore that if you want a large pay packet after graduating, then you should enrol into such fields. However, is it really that simple?

HESA's team of highly skilled analysts has a long and successful history of producing analysis for a wide range of clients.

Both the LEO and the matched data used in the Cambridge study use individual earnings as the principal data source. While fascinating, they do not tell us very much about how graduates have come by these salaries. The data contains no information on the sector the graduate works in, the type of job they do, or where in the country they are employed. This is exactly where HESA data, combined with the expertise of the analysis team, can contribute further to this issue.

This summer saw the collection of the final Longitudinal Destination of Leavers of Higher Education survey, which holds rich information on the employment outcomes of those who graduated in 2012/13, three and a half years after completing their studies. So we set about analysing this dataset to see how it could complement earlier analysis on graduate returns.

The expertise of the HESA analysis team, and the breadth of HESA data, can add context and shed light on current HE issues.

Our investigations were limited to UK domiciled first degree graduates working full-time in the UK. We asked respondents to self-report their earnings and found that the top three median salaries were in medicine and dentistry (£38,000), economics (£34,000), and veterinary science (£34,000). Across all subjects, the median pay was £26,000. Given the additional variables at our disposal, we concentrated on examining the pathways of economics graduates to see if this could illuminate our understanding of why their pay was so high. The figures illustrated that 61% were based in either the financial sector or professional, scientific or technical industry, with 65% of economists working in London.

We then divided economics graduates into the following four separate categories;

  1. Employed in either the finance or professional, scientific or technical sectors and based in London
  2. Employed in either the finance or professional, scientific or technical sectors, but based in another region of the UK
  3. Employed in other sectors of the UK economy, but working in London
  4. Employed in other sectors of the UK economy and working in another region of the UK


chart showing 4 columns of median salaries

Looking at the earnings of each of these groups, those in the first category are paid the most, with a median salary of £40,000. In the next two pots, the median pay ranges between £30,000 and £32,000, whilst the final cluster reports the lowest median income at £27,000. What’s more, more than two-fifths of economists fall into the first group, with just 17% in category four. So, it appears that there is a premium for being based in London’s financial centre, with a considerable proportion of qualified economists working in this location.

The survey also asked individuals to indicate whether they have obtained any other qualifications since attaining their first degree. 52% of economists said they had, compared to 40% amongst the overall population being analysed. In the finance or professional, scientific or technical sectors, 58% had completed new qualifications, compared to 44% of economists in other sectors. Additionally, within these two industries, just under 60% had pursued professional qualifications.

This analysis shows that we need to be careful not to confuse correlation with causation. 

These descriptive statistics highlight the complexity of trying to understand the financial rewards of studying a certain type of degree. A large proportion of economics graduates clearly have an appetite for working in financial and related industries within the capital at present, perhaps because the skills developed on this course complement those required in the finance field. Had their career ambitions been tilted towards other sectors in our economy though, it is unlikely that we would see them report such large earnings. Things are made even more tricky by the fact that a sizeable proportion gain new qualifications so soon after graduating – so making it difficult to disentangle the extent to which the first degree or the new qualifications are responsible for salary progression.

It is certainly therefore the case that we need to be careful what we conclude from current datasets and research on graduate returns, as they don’t always paint the entire picture. Moreover, it’s important not to view the value of higher education simply through a monetary lens. We know from previous research that graduates are motivated by many factors, including a desire for meaningful work. Indeed, HESA’s forthcoming Graduate Outcomes survey, will capture both the financial and non-financial gains from going to university, so we will hear the graduate voice in our data for the first time.


See more research from HESA

Tej Nathwani

Tej Nathwani

Principal Researcher (Economist)

See more research from HESA