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Finance vs Economics

Published on :

21 Aug, 2024

Blog Author :

Wallstreetmojo Team

Edited by :

Ashish Kumar Srivastav

Reviewed by :

Dheeraj Vaidya

Difference Between Finance and Economics

Finance and economics are two different concepts that are somewhat interrelated. Economics is concerned with the consumption, exchange of products and services, production, transfer of wealth, etc., whereas finance is concerned with the full utilization.

In simple terms, economics and finance are just two sides of one coin. If you want to succeed in finance, you need to know economics well. Economics is more about finding the equilibrium point of demand and supply, average cost and marginal cost,

understanding the differences between fixed and variable costs, and many such theoretical concepts. and many such theoretical concepts. On the other hand, finance is the right extension of these concepts. Thus, it has often been seen that people who have made their mark in finance have had an economics background.

More succinctly, economics creates the foundation on which finance builds the house. So, if you want to be a finance professional, you need to know economics well to understand the complexity and vastness of finance.

This article will look at each discipline separately and compare the two to make an informed decision about your career.

If you’re ready, let’s get started right away.

Table of contents

Comparative table, key differences between finance and economics, #1 - for economist, #2 - for finance professional, #1 - primary tasks of an economist, #2 - primary duties of finance professional, work-life balance, compensation.

• Finance vs Economics Video

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Finance vs Economics Explained in Video

Economics and finance are two different disciplines based on their scope of work. Of course, they are interrelated, and no matter what you choose, you would occasionally need to refer back to some parts of both of these subjects once in a while. But they are different. Let us understand how different they are: -

On the other hand, finance is also a science of managing funds subject to three main factors – time, the risk involved in the transaction, and liquidity. There are many branches of finance. As you go deep into this subject, you will realize more things to learn.

For example, you would start with corporate finance to have your fundamentals strong. Then depending on whichever field you choose, you need to

modeling and valuation, project finance, quantitative finance, risk management , portfolio management, investment analysis, and many more. Many people confuse finance with accounting. But finance is much more vast than accounting. To learn the fundamentals of finance, you need to understand accounting, but the scope of finance is much more than accounting. If you are good at maths and logical reasoning, you would make your mark in the financial field.

Now new ideas are born out of two separate but different concepts. So, if you want to do well in any one of them, it is better that you learn the basics of the other. For example, if you decide to go into a financial domain, the basic knowledge of economics will help you understand complex issues. You will connect two different ideas and form concepts while studying. On the other hand, if you decide to go into economics, it will help you know finance fundamentals. Even as an economics student, you will know the practical aspect of how firms work in the real world.

Educational Requirements

The world of education is vast. But still, there is a basic structure you can follow if you want to enter the world of economics or finance.

Being an economist is a great profession. But, of course, there are some things you may dread, like repetitive research, depending more on theoretical dimensions than taking a practical approach. However, once you become an economist, your growth will be dynamic. Therefore, if you wish to learn and be a better economist (top of the curve), you will get all the opportunities.

But what do you need to do to become an economist?

Now there are two things.

• First, you need to decide what you want to become – a top-notch economist or a professional who looks at his profession to earn his living. Let’s say you want to become a top-notch professional. So you need to earn your bachelor’s degree in economics where you will study business, management, and economics.
• But to be top-notch or top 10% of economists globally, you need the power of knowledge. So, it would help if you went for a master's degree, which you will complete within two years.
• And then finally, it is better to earn a Ph.D. as well. Once you are a Ph.D., one would value your opinions and judgments much more than a mere bachelor's degree holder or master's degree holder.

So here’s a chart you should look at as career requirements of an economist –

source: study.com

Finance professionals are much more diverse than economists. Many economics graduates often go for the finance domain because they want to explore more practical aspects of the business than devising theoretical models.

So if you want to go into the finance domain, what would be your educational requirements? Let’s have a look at the diverse opportunities.

The basic thing about finance is that first, you have your bachelor’s degree. It’s always better if you complete your bachelor's in finance, accountancy, economics, or mathematics. These subjects can be the foundation for your future course of action. There are many options. From the myriad of opportunities, you need to decide in which direction you would like to go.

• Investment professional: If you want to go for investment professionals, the best thing to do is to go for the CFA course. CFA exam will not only equip you for becoming an investment professional, but it will also help you become an expert in investment analysis, market analysis, and how to pick the right investment opportunities for your clients.
• Management professional: You can also choose to become a management professional by opting for MBA in finance from a reputed college or university. If you can pursue your MBA degree from a top-notch university, you would be able to get into the investment banking profession or corporate finance of any large corporation. After doing an MBA, you would become more of a business professional than a core-finance professional.
• Risk management professional: You can also choose to go for the FRM exam , CRM exam , ERM exam, and many other risk management courses like actuaries to become a risk management professional within a few years of constant learning and practice.
• Accountant: You can also decide to become a public accountant for CA, CPA, or any other accounting courses. Else, you can join a private bank as well.

Primary Tasks or Roles

Let’s talk about the main responsibilities of an economist and finance professional.

Even if an economist mostly deals with theoretical jargon, she also needs to analyze and interpret a huge sample of data.

• An economist's main work revolved around advising the various stakeholders regarding economics.
• They also need to gather the data, comprehend multiple sampling techniques to conduct surveys, and create different econometric methods to forecast trends.
• Once the forecasting is done, she needs to analyze and interpret the trends and conclude how a firm's strategy needs to be changed (if at all).
• Her duties also include writing various technical and non-technical reports to send across to top management to take proper actions toward changing product policies, the sustainability of the business, and many other factors.
• An economist also needs to give various presentations on her research, analyses, and interpretations to top management executives to make informed decisions.

Now, the finance profession is very diverse. As students can choose different careers and each job would have various key tasks, it is not easy to pinpoint only a few primary functions for all of them. So, we will give a brief overview of the primary functions of financial management professionals. Of course, the primary tasks may differ if you go to other economic domains.

Let’s talk about the primary parts of financial management professionals:

• The main responsibility is to source funds from the market. It may be in the form of a direct loan from financial institutions or conducting IPO if it’s the first time or selling more shares to the existing and new shareholders.
• Once the funds are arranged, it is time to invest the money in the business. That is also a huge concern for financial management professionals. They need to know exactly where to invest in getting maximum ROI from the investment.
• If the business makes a profit, distributing the profit (if at all) or plowing back for  reinvestment in the business should be one of the most important duties.
• Finally, the finance management professional needs to write reports or present his findings to the top management to get approval to go ahead and carry on with his primary responsibilities.

Usually, economists have a great work-life balance as they support management decisions. Of course, that does not mean that the work of economists is not important. However, it does not need to be urgent throughout the year.

In the case of finance professionals, the work-life balance varies from profession to profession. For example, if you are an investment banking professional, your work-life balance will be none. You may get weekends to rest and spend time with your families; some days, you need to stay overnight at the office to meet clients' requirements. On the other hand, if you are an  equity research analyst, you will achieve a good work-life balance. You may also get ample opportunities to spend your weekends with your inner circle, and work pressure is usually much lesser than investment banking professionals. So, the work-life balance depends on which financial domain you pick as your profession. See – Investment Banking Job

According to salary.com, an economist earns around $121,357 per annum as an average salary. So, you can understand that the pay is amazing. Let us glance at the chart below to get an overall idea about the compensation of the economist.

source: Salary.com

From the above chart, it is clear that if you can reach the top 10% of the curve as an economist, you will earn around $173,686 per annum.

Next, let us look at the compensation of financial management professionals.

source: payscale.com

The above chart shows that finance management professionals earn around $84,800 per annum on average. As it revolves around one dimension of compensation, we will try to look at different aspects of it, which is experience-wise compensation.

Let us have a look.

Finance and economics can differ in career, skills, exit opportunities, etc. A typical economics graduate needs to complete a master's and a Ph.D. to get an excellent career opportunity. However, finance graduates can complement their graduation by taking CFA, FRM, PRM to boost their chances of climbing up the finance career. There are some focused options in economics. However, there is a wide variety of choices in finance to choose from.

So, opt for the one that interests you the most!

Guide to Finance vs. Economics. We discussed the difference between finance and economics, and the educational requirements. You may also have a look at the following articles: -

• Economics Formula
• Microeconomics
• Finance vs Marketing Differences
• Macroeconomics vs Microeconomics

Economics Vs. Finance PhD

It's easy to confuse economics with finance -- after all, they both deal with money. But they are two different things and, consequently, a doctorate in economics is different than a doctorate in finance. Make sure that you understand the differences between finance and economics before you undertake graduate studies in either.

A doctorate in economics gives you expertise in a specific area of economics, as well as generalized knowledge of it. Specializations include international economics and development, econometrics and empirical economics, economic theory, business economics, and macroeconomics and finance. It's a research degree, so by completion of the doctorate you should be able to conduct in-depth and independent research of economics. There are typically two stages of an economics degree --prior to candidacy, a doctoral student will usually take courses and examinations, and after candidacy has been achieved, the student will write a dissertation.

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What is the difference between a marketing degree and a communications degree from a college, the difference between a bba in economics & bachelor of the arts in economics, business degree vs. certificate, differences in master of arts in business administration vs. mba, mba vs. accelerated mba.

Like a doctorate in economics, a doctorate in finance will usually require two stages of completion: courses and examinations, followed by a dissertation. And like a doctorate in economics, a doctorate in finance is a research degree that demands both specialized and generalized knowledge. The subject matter of the doctorates are slightly different, however. Finance is certainly related to economics, but researchers specifically focus on the economics of claims on resources. They look at how financial markets behave, how financial firms make decisions and how assets are valued.

Careers in Academia

Since both the doctoral in economics and the doctoral in finance are advanced research degrees, both of them can lead to a career in academia. A doctorate in either field can result in many different kinds of positions, from temporary lecturer to tenured professor, or from a teaching-focused position to a research-based position. It's important to remember that a doctorate in finance is not an advanced Master of Business Administration-it's an analytic degree rather than a professional degree.

Private, Public and Non-Governmental Sector

Many finance doctorate holders have careers in the private sector. They can often be found working in large investment banks rather than wandering the hallowed halls of academia. Economics doctorate holders, on the other hand, are more often found working for non-governmental organizations such as the World Bank, or unions such as doctor's unions. Both can be found in government.

• New York University Department of Economics: Ph.D. Program

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Admissions comparison -- PhD Finance vs. PhD Economics

By rcwlhk June 4, 2008 in PhD in Business

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I would really appreciate any input on this topic!

What do you think are the key differences and similarities between admissions in a top tier PhD Finance program vs. a top tier PhD Economics program?

Perhaps I can start by making the following observations:

(1) Clearly, there are close similarities between the core courses between a PhD Finance student and a PhD Economics student. I believe both need to go through the entire micro, macro and metrics sequence.

(2) PhD Finance programs appear to be more competitive. But I would like to add a slight caveat --- while on absolute numbers basis, it does seem so (i.e. 3 - 5 admits per school). But please do correct me if I'm wrong, but it seems the number of applicants to PhD Finance programs are also smaller than that of Economics.

An example (I know there are more schools out there but I just picked one as an illustration. Feel free to give further examples or counter-examples!)

Northwestern Kellogg PhD Finance: 8 Admitted; 196 Applied; 4.08% Yield

Northwestern PhD Economics: 18 - 25 Admitted; 600 Applied; 3.00% - 4.17% Yield

So, it seems that at least for Northwestern, I don't see a significant difference between the yield (admitted / applied ratio) of PhD Finance and PhD Economics programs.

So, in such cases, do absolute numbers matter more than the ratios?

(3) Just going through the profiles of PhD Finance and PhD Economics students, I've noticed the following trends (please correct me if I'm wrong):

-There's a higher proportion of Economics students with Masters degrees and/or previous academic experiences (i.e. research assistant, publication, etc) than their Finance counter parts

-There are many more Math majors going into Economics programs than Finance

-Very few individuals going into Finance programs had a Finance / Business undergraduate training; but a good number of them have MBA's

-Most of those who are admitted to Finance programs had some form of industry work experience (typically in investment banks, consulting firms, hedge funds, etc)

-The strongest observation that I've made is that, it seems there are a plethora of examples of individuals at top tier Finance programs with significant work experience (i.e. 5 years or more) and did not have a math / hard science undergrad / master background. This leads me to wonder --- how many of these admitted individuals have real analysis (which appears to be VERY IMPORTANT in the TM Econ forum), graduate level econ / math / finance courses, and top Finance / Econ professors writing LOR's for them?

That's the end of my observations.

Please do share your opinions and thoughts!

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I am starting my doctoral studies in Finance this fall. I'll attempt to share all my observations and thoughts based upon your questions.

  (1) Clearly, there are close similarities between the core courses between a PhD Finance student and a PhD Economics student. I believe both need to go through the entire micro, macro and metrics sequence.

I don't know about top tier programs but for the following tier, you take micro,macro and metrics sequence relying on your concentrations. Some guys might not necessarily take micro and macro courses. For example, if you have already taken these courses in intermediate level in undergraduate or masters level, you might not take them. Even more to exemplify, most students with Economics courses does not take these courses.

(2) PhD Finance programs appear to be more competitive. But I would like to add a slight caveat --- while on absolute numbers basis, it does seem so (i.e. 3 - 5 admits per school). But please do correct me if I'm wrong, but it seems the number of applicants to PhD Finance programs are also smaller than that of Economics.   An example (I know there are more schools out there but I just picked one as an illustration. Feel free to give further examples or counter-examples!) Northwestern Kellogg PhD Finance: 8 Admitted; 196 Applied; 4.08% Yield Northwestern PhD Economics: 18 - 25 Admitted; 600 Applied; 3.00% - 4.17% Yield   So, it seems that at least for Northwestern, I don't see a significant difference between the yield (admitted / applied ratio) of PhD Finance and PhD Economics programs.   So, in such cases, do absolute numbers matter more than the ratios?

I partly agree and partly disagree with your opinion. The portion that I agree with you is, - no doubt on that- , business schools admit only small numbers per specialization whereas economics departments have more crowded incoming classes. The part that I don't agree with you is that I think PhD Finance programs have more number of applicants and since these programs give full and generous funding and provide better opportunities and options after graduation, these programs are much more competitive. On another perspective, people apply to economics because they think that they are more likely to receive admission letter from econ. departments. Don't be so bothered with numbers. Decide which one you are more interested in.

(3) Just going through the profiles of PhD Finance and PhD Economics students, I've noticed the following trends (please correct me if I'm wrong): -There's a higher proportion of Economics students with Masters degrees and/or previous academic experiences (i.e. research assistant, publication, etc) than their Finance counter parts   -There are many more Math majors going into Economics programs than Finance   -Very few individuals going into Finance programs had a Finance / Business undergraduate training; but a good number of them have MBA's   -Most of those who are admitted to Finance programs had some form of industry work experience (typically in investment banks, consulting firms, hedge funds, etc)   -The strongest observation that I've made is that, it seems there are a plethora of examples of individuals at top tier Finance programs with significant work experience (i.e. 5 years or more) and did not have a math / hard science undergrad / master background. This leads me to wonder --- how many of these admitted individuals have real analysis (which appears to be VERY IMPORTANT in the TM Econ forum), graduate level econ / math / finance courses, and top Finance / Econ professors writing LOR's for them?   That's the end of my observations.

I have been directly admitted to PhD. Finance from undergraduate. I might be an exceptional example but I already with some guys in the same situation. However, most of the guys, who were planning to go for PhD Finance, had some graduate degrees and extensive work experience somehow. Most of them were above their mid twenties.

Hope this helps!

Thanks for the detailed insight --- especially from a PhD Finance student-to-be!

(1) I wasn't aware that in PhD Finance, there's some flexibility in regards to the economics courses that one is required to take. But that's interesting info!

(2) I don't want to be argumentative or defensive (as I really do appreciate all of your inputs), but I still cannot find the concrete quant data to support that PhD Finance is MUCH MORE competitive than their PhD Economics counterparts.

I'm just adding more data points here (and again, by no means exhaustive):

Figures shown below as: Admits (or enrolled, whatever is available) / Applicants (% Ratio)

Finance: 4 / 75 (5.3%)

Economics: 23 / 178 (12.9%)

http://www.biz.uiowa.edu/phd/Fall07AdmResults.html

Finance: 4 - 6 / 300 (1.3% - 2.0%)

Economics: 30 - 40 / 1000 (3.0% - 4.0%)

NYU > Economics > Graduate Program > Ph.D. Programs > Bulletin

That's all I can find in my 15 min search. But so far, I'd venture to say that it is inconclusive. (But Iowa was definitely very interesting). As well, and I think this has been noted before, very few schools give detailed breakdowns of their business school admits and so, the Finance admit-to-application figures are incredibly difficult to find.

(3) I don't think you touched on this before but would you please comment further? That is, the typical math aptitude of PhD Finance admits. I still can't think of a very good reason to explain why or how some of these people with many years of work experience + a non-math / hard science background can get pass the "math requirements" of the PhD Finance program. Does this hint to the notion that the process is indeed more "random" than PhD Economics? Or perhaps I'm just thinking in a totally different direction.

I also do recognize that the math requirements in corporate finance and asset pricing are vastly different; namely, less math (relatively speaking) in corporate finance and more math in asset pricing (especially theoretical material).

@ Iowa Finance: 4 / 75 (5.3%) Economics: 23 / 178 (12.9%) http://www.biz.uiowa.edu/phd/Fall07AdmResults.html   NYU Finance: 4 - 6 / 300 (1.3% - 2.0%) Economics: 30 - 40 / 1000 (3.0% - 4.0%) PhD NYU > Economics > Graduate Program > Ph.D. Programs > Bulletin  

Arizona University, Tucson also says that they receive about 40-50 applications annually, and only admit 2 to 4 of them (Finance PhD). The pattern is similar in most schools: Fewer applications in Finance but the chance of enrollment is more slim in Finance then it is in Economics. I explained the reasons elaborately in my post forehead.

(3) I don't think you touched on this before but would you please comment further? That is, the typical math aptitude of PhD Finance admits. I still can't think of a very good reason to explain why or how some of these people with many years of work experience + a non-math / hard science background can get pass the "math requirements" of the PhD Finance program. Does this hint to the notion that the process is indeed more "random" than PhD Economics? Or perhaps I'm just thinking in a totally different direction.   I also do recognize that the math requirements in corporate finance and asset pricing are vastly different; namely, less math (relatively speaking) in corporate finance and more math in asset pricing (especially theoretical material).

I think schools prefer guys with quantitative analysis. Let's think of an investment banker, or someone who has extensive quantitative skills. And assume that this guy has a masters in Mathematical Finance. This guys knows how the financial sector works, and he is experienced. Excellent choice!! But I don't know about the guys with hard science are enrolled in Finance PhD program. They might have convincing letters of recommendation and a fantastic SOP to convince the faculty about that. Do you imagine a finance faculty, which is interested in enrolling and FUNDING students with no math background. Finance requires some math background, at least at calculus level. I still doubt about guys just enrolled with basic calculus. It is very hard to sustain in Finance PhD without strong quantitative skills. I see the issue as nearly impossible, in my personal judgment.

For my case, I don't have much work experience, just some intern in accounting field, but I am still an undergraduate that has taken Calculus, Mathematical Economics, Statistics, Mathematical Statistics, Econometrics, Applied Econometrics. We can say that I am familiar with Math :) The fact is that you forget math when you do not use it for years.

Hi all,   I would really appreciate any input on this topic!

I'm just coming to the end of my first year in a phd finance program, so here's what I've learned so far....

The % admittance to finance vs top econ schools is similar but there's a huge difference in level. Finance programs are much much smaller. That means even if you're really well qualified for a finance program, it is still very likely to get rejected. If you go that route, apply to a lot of schools. I did about 12 & that almost wasn't enough! Once you're in though, they want you to succeed too.

Econ departments have less of a random factor in the admittance part - they figure once you're in they'll see if they like you and if not cut you out in the first couple of years. Once you're in, you also need to do better than other students to stay in.

Depends on the program, but in mine the first year is basically the same as for first year econ students. They have to do macro in the 1st year, whereas it is an elective for us in the 2nd year & we have some finance seminar courses instead, but pretty much if I & an econ student planned our electives right, we could end up both doing exactly the same courses.

(2) PhD Finance programs appear to be more competitive.

The problem is the randomness of the process. To get into finance you need to be good + be very lucky, or apply to a much large number of schools to have a good shot at getting in somewhere.

Business schools are more likely to value some pertinent non-academic work experience on the whole, particularly if it gives you inside knowledge of some area of industry. As far as math ability, in econometrics classes, the finance students tended to usually be towards the top of the distribution in such exams. Econ seems fine with a good knowledge of calculus, maybe some ode's for macro, linear algebra & analysis. If the finance program specializes in asset pricing, they'll probably also be looking for more of the wacky math at admittance - other kinds of analysis, stochastic calc. pde's etc as well.

This leads me to wonder --- how many of these admitted individuals have real analysis (which appears to be VERY IMPORTANT in the TM Econ forum), graduate level econ / math / finance courses, and top Finance / Econ professors writing LOR's for them?

Yes, yes & no in that order at least for me! For other data, I had 3 years of academic research + several years banking industry experience.

That's some very good insight! Thanks a lot!

I'm just coming to the end of my first year in a phd finance program, so here's what I've learned so far....       The % admittance to finance vs top econ schools is similar but there's a huge difference in level. Finance programs are much much smaller. That means even if you're really well qualified for a finance program, it is still very likely to get rejected. If you go that route, apply to a lot of schools. I did about 12 & that almost wasn't enough! Once you're in though, they want you to succeed too.   Econ departments have less of a random factor in the admittance part - they figure once you're in they'll see if they like you and if not cut you out in the first couple of years. Once you're in, you also need to do better than other students to stay in.       Depends on the program, but in mine the first year is basically the same as for first year econ students. They have to do macro in the 1st year, whereas it is an elective for us in the 2nd year & we have some finance seminar courses instead, but pretty much if I & an econ student planned our electives right, we could end up both doing exactly the same courses.     The problem is the randomness of the process. To get into finance you need to be good + be very lucky, or apply to a much large number of schools to have a good shot at getting in somewhere.     Business schools are more likely to value some pertinent non-academic work experience on the whole, particularly if it gives you inside knowledge of some area of industry. As far as math ability, in econometrics classes, the finance students tended to usually be towards the top of the distribution in such exams. Econ seems fine with a good knowledge of calculus, maybe some ode's for macro, linear algebra & analysis. If the finance program specializes in asset pricing, they'll probably also be looking for more of the wacky math at admittance - other kinds of analysis, stochastic calc. pde's etc as well.       Yes, yes & no in that order at least for me! For other data, I had 3 years of academic research + several years banking industry experience.

Just another question popped into my mind and I hope you could share some insight on this!

With regards to the mathematic skills one needs to get admitted into PhD Finance vs. PhD Economics, what do you think are the key differences? I know you touched on this briefly on your previous post but I'm hoping you could expand on it.

And yes, I do realize that most programs' official prerequisites are just multivariable calculus, linear algebra, statistics and maybe real analysis. But "realistically speaking" (i.e. to have a realistic chance of getting in), what additional math skills do we need here? Specifically what are the differences and similarities for PhD Finance vs. PhD Economics? (i.e. Does Finance prefer candidates to have stochastic calculus whereas it may be not so important in Economics? Conversely, perhaps Economics prefer people to have greater skills in ODE than in Finance?) :grad:

Not knowing the mind of the admissions commitee, I can only venture a guess, but anything that sets you apart from the large stack of applications with very high quantitative scores is a good thing! It would depend somewhat on the program. If you're looking at departments that do theoretical asset pricing then a background in such things would tie in nicely. In general you're much more likely to end up actually using it in a finance program than in economics. For less theoretical or more corporate places, it's not nearly as likely to be a critical decision maker, but again, having something that makes you stand out would be the thing.

On the whole, differences between econ & finance department requirements are probably outweighed by differences due to departmental focus on such things as theory vs empirical focus, as well as idiosyncratic variations due to who comprises the admit commitee that year.

Probably if I had to do the application over again & had the time, I'd do a few extra statistical theory classes, pde's or linear analysis, more because they are useful than anything else. I'd also spend more time getting good LOR's and vet my SOP through more people that know what a phd program is like.

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The field of finance covers the economics of claims on resources. Financial economists study the valuation of these claims, the markets in which they are traded, and their use by individuals, corporations, and the society at large.

At Stanford GSB, finance faculty and doctoral students study a wide spectrum of financial topics, including the pricing and valuation of assets, the behavior of financial markets, and the structure and financial decision-making of firms and financial intermediaries.

Investigation of issues arising in these areas is pursued both through the development of theoretical models and through the empirical testing of those models. The PhD Program is designed to give students a good understanding of the methods used in theoretical modeling and empirical testing.

Preparation and Qualifications

All students are required to have, or to obtain during their first year, mathematical skills at the level of one year of calculus and one course each in linear algebra and matrix theory, theory of probability, and statistical inference.

Students are expected to have familiarity with programming and data analysis using tools and software such as MATLAB, Stata, R, Python, or Julia, or to correct any deficiencies before enrolling at Stanford.

The PhD program in finance involves a great deal of very hard work, and there is keen competition for admission. For both these reasons, the faculty is selective in offering admission. Prospective applicants must have an aptitude for quantitative work and be at ease in handling formal models. A strong background in economics and college-level mathematics is desirable.

It is particularly important to realize that a PhD in finance is not a higher-level MBA, but an advanced, academically oriented degree in financial economics, with a reflective and analytical, rather than operational, viewpoint.

Faculty in Finance

Anat r. admati, juliane begenau, jonathan b. berk, michael blank, greg buchak, antonio coppola, darrell duffie, steven grenadier, benjamin hébert, arvind krishnamurthy, hanno lustig, matteo maggiori, paul pfleiderer, joshua d. rauh, claudia robles-garcia, ilya a. strebulaev, vikrant vig, jeffrey zwiebel, emeriti faculty, robert l. joss, george g.c. parker, myron s. scholes, william f. sharpe, kenneth j. singleton, james c. van horne, recent publications in finance, dollar safety and the global financial cycle, monetary tightening and u.s. bank fragility in 2023: mark-to-market losses and uninsured depositor runs, trading stocks builds financial confidence and compresses the gender gap, recent insights by stanford business, a “grumpy economist” weighs in on inflation’s causes — and its cures, the surprising economic upside to money in u.s. politics, your summer 2024 podcast playlist.

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DEPARTMENT OF ECONOMICS

• Degree Requirements & Goals
• Financial Economics

Financial Economics Ph.D.

Kellogg Program Description

Finance Department Website

The Department of Economics and the Finance Department in the Kellogg School of Management have a joint Ph.D. degree in Financial Economics.

The following requirements are in addition to, or further elaborate upon,  general degree requirements  and the policies on  Satisfactory Progress, Probation and Exclusion  of The Graduate School, and additional requirements for Satisfactory Academic Progress of the Department of Economics and the Finance Department.

Coursework Requirements

Total Required Units:  18

Other Ph.D. Degree Requirements

Examinations: satisfactory grades in each of the three core areas (microeconomics, macroeconomics, and econometrics); oral examination for approval of dissertation prospectus

  Research/Projects:  two research papers presented in the student seminar (ECON 501) or equivalent. Out of these, one paper is the second-year summer paper detailed below

  Finance Comprehensive Exam : Students must pass a Finance Competence Requirement. This can be done by achieving a 3.6 GPA across the six finance doctoral courses (FINC 585-1,2,3 and FINC 586-1,2,3), or by passing a comprehensive Finance exam. The Exam takes place at the beginning of the summer quarter of the second year, typically in June.

  Second-year Research Paper and Advisors: Students need to complete a research project to be presented to the department in the first week of September at the end of the summer quarter of the second year. The research project must be supervised by an individual faculty advisor (who can be the same as, or distinct from, the Academic Advisor) selected by the end of the winter quarter. The second-year advisor need not be the same person as the eventual main dissertation advisor.

  Ph.D. Dissertation:  original, independent research

  Final Evaluations:  oral dissertation defense

  Supervised Teaching Experience:  All doctoral students are required to act as a teaching assistant for at least one quarter. As part of these duties, the student must lead a weekly discussion section. Teaching experience is an essential part of graduate training. Foreign students must demonstrate acceptable English proficiency as prescribed by The Graduate School. Evaluations are made and kept as part of the students' record.

 There are two points of entry into the joint graduate program in Financial Economics.

• The first is a direct application when applying to graduate school at Northwestern. Admission requires approved by both the Economics and the Finance admissions committees.
• The second is for students initially enrolled in the Economics Ph.D. program to apply for entry after achieving candidacy. (Students initially enrolled in the Finance Ph.D. program can do the same.) Economics students should initiate the process by contacting the Economics Director of Graduate Studies immediately after candidacy. Applications must be approved by both the Economics and the Finance admissions committees. If the application is approved, the student initiates a degree transfer request to The Graduate School.

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PhD Joint Program in Financial Economics

The financial economics phd program leverages the strengths of two renowned programs: the phd program in finance and the university of chicago’s kenneth c. griffin department of economics..

Core economics training is critical for students doing research in financial economics, and advances in financial economics have important implications for other areas of economics.

As a student in our Joint Program in Financial Economics , you’ll work with thought leaders in both economics and finance and follow your research interests wherever they lead. Leveraging courses and resources in the Finance dissertation area at Chicago Booth and the university’s Kenneth C. Griffin Department of Economics , you’ll build a foundation for research at the intersection of finance and economics.

Our Distinguished Finance and Economics Faculty

As a student in the joint program, you’ll work with professors and classmates in both the Department of Economics and the Stevens Doctoral Program in Finance at Chicago Booth. Faculty bring research expertise in a wide range of fields and serve as mentors to PhD students.

Finance Faculty

Francesca Bastianello

Assistant Professor of Finance and Liew Family Junior Faculty Fellow, Fama Faculty Fellow

Emanuele Colonnelli

Professor of Finance and Entrepreneurship

George M. Constantinides

Leo Melamed Professor of Finance

Douglas W. Diamond

Merton H. Miller Distinguished Service Professor of Finance

Eugene F. Fama

Robert R. McCormick Distinguished Service Professor of Finance

Niels Gormsen

Neubauer Family Associate Professor of Finance and Fama Faculty Fellow

Lars Hansen

David Rockefeller Distinguished Service Professor The University of Chicago Departments of Economics, Statistics and the Booth School of Business

John C. Heaton

Joseph L. Gidwitz Professor of Finance

Steven Neil Kaplan

Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance and Kessenich E.P. Faculty Director at the Polsky Center for Entrepreneurship and Innovation

Anil Kashyap

Stevens Distinguished Service Professor of Economics and Finance

Ralph S.J. Koijen

AQR Capital Management Distinguished Service Professor of Finance and Fama Faculty Fellow

Professor of Finance and Fama Faculty Fellow

Stefan Nagel

Fama Family Distinguished Service Professor of Finance

Scott Nelson

Assistant Professor of Finance and Cohen and Keenoy Faculty Scholar

Pascal Noel

Neubauer Family Professor of Finance and Kathryn and Grant Swick Faculty Scholar

Lubos Pastor

Charles P. McQuaid Distinguished Service Professor of Finance and Robert King Steel Faculty Fellow

Raghuram G. Rajan

Katherine Dusak Miller Distinguished Service Professor of Finance

Bruce Lindsay Distinguished Service Professor of Economics and Public Policy

Pietro Veronesi

Deputy Dean for Faculty and Chicago Board of Trade Professor of Finance

Robert W. Vishny

Myron S. Scholes Distinguished Service Professor of Finance and Neubauer Faculty Director of the Davis Center

Michael Weber

Associate Professor of Finance

Anthony Lee Zhang

Luigi Zingales

Robert C. McCormack Distinguished Service Professor of Entrepreneurship and Finance

Professor of Economics and Finance

Department of Economics Faculty

Fernando Alvarez

Ali Hortacsu

Harald Uhlig

Kenneth C. Griffin Department of Economics

Alumni success.

Our PhD graduates lead successful careers  in prestigious academic settings, such as the Stanford Graduate School of Business and London Business School, as well as in leading financial institutions, including the International Monetary Fund.

Jane (Jian) Li, PhD '21

Assistant Professor of Business, Finance Division Columbia Business School, Columbia University Jane's research lies at the intersection of macroeconomics and finance. She is particularly interested in how financial intermediaries affect the real economy and how different types of financial institutions can contribute to financial instability. Her dissertation area is in financial economics.

A Network of Support

Doctoral students at Booth have access to the resources of several interdisciplinary research centers that offer funding for student work, host workshops and conferences, and foster a strong research community.

Becker Friedman Institute for Economics Bringing together researchers from the entire Chicago economics community, the Becker Friedman Institute fosters novel insights on the world’s most difficult economic problems.

Center for Research in Security Prices CRSP maintains one of the world’s largest and most comprehensive stock market databases. Since 1963, it has been a valued resource for businesses, government, and scholars.

Fama-Miller Center for Research in Finance Tasked with pushing the boundaries of research in finance, the Fama-Miller Center provides institutional structure and support for researchers in the field.

George J. Stigler Center for the Study of the Economy and the State Dedicated to examining issues at the intersection of politics and the economy, the Stigler Center supports research by PhD students and others who are interested in the political, economic, and cultural obstacles to better working markets.

The Kent A. Clark Center for Global Markets Enhancing the understanding of business and financial market globalization, the Clark Center for Global Markets positions Chicago Booth as a thought leader in the understanding of ever-changing markets and improves financial and economic decision-making around the world.

Macro Finance Research Program The Macro Finance Research Program (MFR) expands our understanding of how financial markets affect the economy as a whole and, conversely, how the macroeconomy influences financial markets. It does so by bringing together a community of elite and emerging scholars and with common ambitions to tackle these important challenges. One of the important ambitions of this program is to provide intellectual and research support for advanced students in the joint PhD program in financial economics.

Rustandy Center for Social Sector Innovation Committed to making the world more equitable and sustainable, the Rustandy Center works to solve complex social and environmental problems. The center’s student support includes fellowships, research funding, and networking opportunities.

Spotlight on Research

Chicago Booth Review regularly highlights the research findings of Booth faculty and PhD students in financial economics.

Line of Inquiry: Amir Sufi on Household Debt and Business Cycles

Chicago Booth’s Amir Sufi explains how the financial sector's willingness to extend credit to households helps fuel booms and busts.

How is IT Spending Changing Banking?

According to researchers Zhiguo He (previous Booth prof.), Sheila Jiang and Douglas Xu (both Booth PhD graduates), and Xiao Yin, IT investment figures prominently in banking activities.

How Can We Calculate the US's Greatest Fortunes?

Chicago Booth’s Eric Zwick and his coauthors have devised a new way to gauge how much wealth the ultrawealthy have and what it’s composed of. Their results can help update and sharpen the picture of inequality in the US.

The PhD Experience at Booth

Maryam Farboodi, PhD ’14, talks about how the Booth faculty challenged her to focus her research on issues that are applicable to the current financial sector.

Video Transcript

Maryam Farboodi, ’14: 00:02 My work lies in the intersection of finance and economics, trying to apply theoretical models to think about broader questions in big data technology. I was doing extremely theoretical research and I was always interested in doing stuff which are more related to the real world, which led me to join Chicago econ and then the Joint Financial Economics Program at Chicago Booth.

Maryam Farboodi, ’14: 00:29 The faculty really helped me focus my research on issues that are relevant to the current financial climate. A lot of current policy focuses on how financial institutions intermediate for each other and that has been the focus of my research. The faculty at Chicago Booth challenged me in making sure that the insight is applicable to the current financial sector.

Maryam Farboodi, ’14: 00:52 What is really, really special about Booth is the really close interaction between the faculty here and the econ department. Chicago Booth, in particular the joint program, is the best place you can be in. It provides an environment where you can interact with people who are extremely deep in both finance and economics and not lose track of important issues. Chicago Booth and Econ has really being like home to me. That's the feeling that any student can get if they really engage themselves with faculty. 

Current Financial Economics Students

Students in Chicago Booth’s Joint Program in Financial Economics focus their PhD research on a vast array of issues, from state-government borrowing costs to wealth inequality to climate policy. They go on to positions at leading academic institutions and global financial organizations.

Current Students

Monica Barbosa Connor Brennan

Filippo Cavaleri

Manav Chaudhary Rahul Chauhan

Shirui (Suri) Chen

Aditya Dhar Laurenz De Rosa

Joanna Harris Jacob Hartwig

Lewei He Tanvi Jindal

Jingoo Kwon

Federico Mainardi

Benjamin Marrow Eric Milstein Sixun Tang Yifan Wang Judy Yue

See a list of the current students in our Finance PhD Program .

How to Apply

To join the Joint Program in Financial Economics, you will need to be admitted to both the doctoral program in the Department of Economics and the PhD Program in Finance at Chicago Booth. However, you need only apply to one or the other program. Learn more about applying to Chicago Booth or to the Department of Economics .

Program Requirements

Learn more about the Joint Program in Financial Economics at Chicago Booth on the website or by referencing the joint program-specific guidebook below. See Joint Program-Specific Guidebook

General Program Expectations and Requirements

The Stevens Program at Booth is a full-time program. Students generally complete the majority of coursework and examination requirements within the first two years of studies and begin work on their dissertation during the third year. For details, see General Examination Requirements by Area in the Stevens Program Guidebook below.

Download the 2023-2024 Guidebook!

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PhD Program

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Wharton’s PhD program in Finance provides students with a solid foundation in the theoretical and empirical tools of modern finance, drawing heavily on the discipline of economics.

The department prepares students for careers in research and teaching at the world’s leading academic institutions, focusing on Asset Pricing and Portfolio Management, Corporate Finance, International Finance, Financial Institutions and Macroeconomics.

Wharton’s Finance faculty, widely recognized as the finest in the world, has been at the forefront of several areas of research. For example, members of the faculty have led modern innovations in theories of portfolio choice and savings behavior, which have significantly impacted the asset pricing techniques used by researchers, practitioners, and policymakers. Another example is the contribution by faculty members to the analysis of financial institutions and markets, which is fundamental to our understanding of the trade-offs between economic systems and their implications for financial fragility and crises.

Faculty research, both empirical and theoretical, includes such areas as:

• Structure of financial markets
• Formation and behavior of financial asset prices
• Banking and monetary systems
• Corporate control and capital structure
• Saving and capital formation
• International financial markets

Candidates with undergraduate training in economics, mathematics, engineering, statistics, and other quantitative disciplines have an ideal background for doctoral studies in this field.

Effective 2023, The Wharton Finance PhD Program is now STEM certified.

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