Finance, economics, and accounting are usually considered something that falls under the same category. However, the difficulty of students to differentiate these subjects and go for one major is actually a hustle.
A student of these subjects can only understand the difference between difficulty levels, skills, and orientation. Although both subjects are related to money, transactions, economies, markets, etc., but comprised of learning entirely different aspects of the market.
If you’re confused about which major subject to choose from, finance and economics, you’re just at the right place. This article will differentiate between finance and economics based on degree, career, salary, future prospects, and market scope.
In general, finance is more about a mix of accounting and economics. Whereas economics is a theoretical subject that is based on market phenomena, factors, and events.
You can go for an economics degree if you’re interested in something that is based on critical thinking and theoretical concepts. However, if you aim to study a subject that gives you a mixed perspective with practical implications and numerical, a finance major degree can be your cruise.
After the detailed analysis, you can know which subject is harder, why it is harder, and which subject you should go for. So let’s get into it.
What Is Finance?
Finance is a subject that comes under the broader umbrella of management sciences, but it is also closely interlinked with economics and accounting. We can define finance as the study of managing money & funds held by individuals, companies, or governments.
When finance is concerned, it means everything from investment to budget, borrowing to lending, and forecasting market behaviors based on economics theories.
According to the definition given by Webster’s Ninth New Collegiate Dictionary,
“Finance is the money resources, income, etc., of a nation, organization, or person.”
If we go through the definition of finance given by Ivan Thompson, he says,
“the term finance comes from the Latin word finis, and it means end or finish. It has to do with obtaining and using money management. Its implications affect both individuals and businesses, organizations, and the state.
Finance can be categorized into three types: public finance(government), corporate finance(businesses), and personal finance(individuals). Another category of finance also exists that is termed behavioral finance. It studies the emotional or cognitive reasons behind financial decisions of individuals or businesses.
What is Economics?
Economics is the study of topics and areas related to production, consumption, and transfer of wealth. We can define Economics as,
“it’s a social science directed at the satisfaction of needs and wants through the allocation of scarce resources which have alternative uses.”
It wouldn’t be wrong to say that economics has combined the study of needs/choice/wants and scarcity. Economics is a subject that aims to solve the problem of limited resources(scarcity), which implies that every good and service in the world runs out when more people demand it. Therefore, trade-offs are the most critical aspect of markets.
Economics deals with studying how humans in a society make decisions when they face scarcity. More practically, economics focuses on the problem of scarcity and its implication in a wider perspective of societies, countries, and the world.
The students of economics must expect exposure to critical thinking, theoretical concepts, and practical implications in the subcategories of economics like econometrics, macroeconomics, monetary economics, money and interest rates, business cycle, experimental economics, microeconomics, etc.
Finance Vs. Economics
Declaring a subject harder than another subject is not a practical approach. There is no concrete answer to which subject is harder in general.
However, the difficulty of a subject is concerned with the interest of the student, orientation, and approach.
Besides, every subject has its own charms and adversities that can only be explored when you dive into the subject. However, we have tried to summarize what it looks like to study and pursue each subject in your educational and professional life.
The finance degree requires you to have an understanding of not only accounting but economics as well. To simply put, finance is a subcategory or branch of economics.
Therefore, a finance degree is a plus to an accounting degree and also covers the economics of money management at the public, corporate or personal level. The students of finance degree can expect to learn the subjects like:
- Financial planning
- Risk management
- Financial trend analysis
- Financial reporting
- Financial markets
- Financial economics
- International finance
- Corporate finance
- Financial mathematics
- Behavioral finance
- Financial management
- Preparing financial statements
When we talk about economics, it is about studying production, consumption, and wealth in a broader perspective than finance.
It’s more than management of the money. The subject of economics covers how societies in national, local, or international perspectives distribute the resources, fulfill needs, and how markets work.
The most common subjects studied in economics are:
- Business Foundations
- Principles of Economics
- Business Analysis, Methods, and Techniques
- Microeconomics and Macroeconomics
- Political Economy
The professional life and career path of economics and finance sound very similar to many in the professional life and career path. However, the job description, responsibilities, and orientation for both careers are distinct when we dig deeper.
When we talk about an individual’s career and orientation with a major finance degree, the job description and requirements can be similar when it comes to working hours, the nature of the job, and fieldwork requirements.
However, the job roles differ as people with finance degrees are typically hired as commercial bankers, financial traders, insurance officers, investment bankers, hedge fund managers, financial consultants, quant specialists, and financial managers. Simply put, the jobs of finance degree holders are more focused on money management and planning.
After studying economics as a major subject in your bachelor’s or master’s degree, the career options are also unending. You have studied the labor markets, the principle of production & consumption, economics, and analytical skills during your economics degree that opens up the doors to careers like:
- Data analysts
- Financial risk analyst
- Economic researcher
- Public sector roles
In some cases, finance-related roles like a financial consultant to big MNCs and governments can also be an option for you.
What is the crux of the matter?
Regardless of which career path is harder, you cannot excel in the most comfortable career if it doesn’t entice you or you don’t have an interest in it. Therefore, whichever path you choose, having an interest in the respective field is necessary.
Who Makes More Money?
Although the career paths of both professionals(finance and economics) sound similar. Although the average median wage of both career paths lie close to each other, Economics major professionals are on the higher end. However, different roles have different opportunities and compensation.
According to the U.S. Bureau of Statistics, the annual wage range of finance-related jobs is between $70,000 to $122,000 as per data 2021. On the other hand, the professionals with an economics major have an annual median wage of around $114,190. The professionals serving in the education sector make around $120,000 in economics.
Finance Vs. Economics: What Makes Them Hard?
Let’s have a quick view of why finance sounds like a difficult subject to many and why a lot of students run away from economics.
Starting with finance, it focuses on risk analysis, using a mix of economics and accounting, and complex mathematics make it sound like a difficult subject to study.
Heavy dependence on financial figures, numbers, and data makes the subject difficult for students who do not have a good command of complex mathematics. Whereas a lot of students want to get away from economics due to theories of economics and concepts that require critical thinking and analytical skills.
On the other hand, economics is considered a hard subject due to theories, concepts, derivatives, and complex mathematics. It is difficult for students to command the techniques from derivatives to differentials when they don’t have a good command.
Besides, the theory and concepts of economics apply to single individuals as well as large corporations and even countries. Therefore, absorbing information about such a diverse topic becomes difficult for many.
Final Verdict: Is Finance Harder Than Economics
It’s time for the final verdict.
Is finance harder than economics?
The first answer would be that each subject has its own easy aspects as well as the technicalities. Some people might consider finance harder than economics. While there will be another majority of people who consider economics as something harder than finance.
In general, economics is harder for people who are more oriented toward accounting and mathematics. The analytical and critical thinkers with no interest in mathematics often find economics a harder subject. Therefore, we can conclude that personal interest defines a subject as hard or easy.