Although there is a good deal of overlap between the fields of economics and finance, each has its own focus. Economics is a field that studies broadly how goods and services are produced, distributed and consumed. Finance is an applied branch of economics that studies the allocation of resources and how financial agents make decisions in the presence of uncertainty.
Scope of the Degrees
A finance Ph.D.program focuses specifically on the economics of claims on resources, such as money, which is a claim on goods and services, or stocks, which are a claim on money or commodities. Finance Ph.D. students study the behavior of financial markets, the pricing and valuation of assets, and the ways in which firms and individuals make financial decisions. An economics Ph.D. program generally provides a wider perspective on economic theory and, in addition to mainstream economics theories, will often focus on more heterodox perspectives such as feminist or post-Keynesian economics.
Both finance Ph.D. students and economics Ph.D. students should enter their programs with a fairly high level of mathematical skill -- generally at least one year of calculus, along with knowledge of linear algebra, matrix theory, statistical inference and probability theory. A strong background in economics is also desirable in both cases. In addition, finance students should have knowledge of programming languages such as C, Fortran, Matlab or GAUSS. Both Ph.D. programs require a bachelor’s degree, though a degree in finance or economics is not absolutely required. Most economics Ph.D. programs do, however, require that an applicant show strong basic knowledge of economic theories and concepts.
Coursework and Program
Both Ph.D.s typically take five to six years to complete, although some students may finish their programs in less time. Generally, the first year or two is devoted to coursework. During this time, finance students take classes in asset pricing, corporate finance, empirical finance, mathematics, and theoretical and applied economics. Economics students may take classes in development economics, labor economics, economic history, comparative economic systems, international economics and econometrics. Upon the completion of their required coursework, Ph.D. students in both finance and economics typically must pass qualifying exams in their third or fourth years, then complete a dissertation.
Graduates of both finance and economics Ph.D. programs often find careers in academia, teaching and researching at the college or university level. Other career options might include positions at think tanks and economic institutions, such as the International Monetary Fund and the U.S. Treasury Department. A finance Ph.D. is not the same as a higher-level MBA, but is rather an advanced academic degree, stressing research and analysis rather than an operational viewpoint.
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