In that same vein, we apparently have a very good explanation why there are so many econ majors of late — basically, their starting salaries are 50% higher than those of “liberal arts majors”.

As noted in last semester’s post on Gender Disparities and Incentive Effects, people make decisions based on their potential options and the expectation value of those options’ outcomes.

The trend toward Econ majors (or double majors), especially compared to DivI majors, seems quite rational especially in light of the increasing financial incentives involved. This is not something that can be weeded out, at least not to a substantial extent, by the admissions process.

The way to do that would be to find a field that has a use for lots of (e.g.) English majors, that pays comparable salaries to starting Econ salaries, and has numerous employers both willing and able to pay an enormous number of non-quants such a premium salary while remaining solvent.

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