An economics Ph.D. program typically consists of one year of "boot camp" (core courses in microeconomics, macroeconomics, and econometrics) followed by one year of field courses in your chosen specialization. After the second year, your time is devoted to working on your dissertation. The average time to get a Ph.D. is 5.5 years. Some students finish in as few as 3 years (very rare), while others take 7, 8 or more years. The first year of graduate school is rough for most students – it represents a kind of initiation ritual. Making the transition from taking classes to doing research (3rd year) is also tough.
There are a number of job opportunities available to economics Ph.D.s. These include academia (research universities and liberal arts colleges), the private sector (including economic consulting and investment banking), the government (e.g., Federal Reserve, Congressional Budget Office, Treasury, Department of Justice), and international organizations (e.g., IMF, World Bank).
You should think carefully about whether an economics Ph.D. is really right for you. While it is true that many economics Ph.D.s work in nonacademic jobs, your training and mentoring in graduate school will be geared towards turning you into an academic economist. If you don't want to be an academic economist, you have to figure out whether this training is really necessary for the job you want. For many nonacademic jobs, a different degree – master's of public policy, MBA, etc. – might suffice without putting you through the misery of 5+ years in graduate school. You should not get a Ph.D. if you are doing it for the money (an MBA has a higher monetary payoff) or if you are interested in policy but hate math (a public policy program might be a better fit). If you are not sure whether a Ph.D. is right for you, it is probably best to wait – work for a few years or get a different degree, then revisit the question. There are a number of jobs that allow you to do economic research and can help you decide if graduate school is right for you (click here for a list of employers). Many students work at one of these jobs for a couple of years and then go to graduate school.
The most important factors for getting into a good graduate school are GPA, performance in specific math and economics classes, undergraduate research experience, and recommendation letters. Other factors include your personal statement and math GRE score. All of these are discussed below.
Most ideas in economics are expressed in the language of math. Graduate work requires a high level of competence in math. Therefore, advanced math courses are a very important part of your preparation. At a minimum, you should take courses in multivariable calculus and linear algebra. Mathematical statistics is a good idea as well -- in fact, the University of Wisconsin economics graduate program (which is highly ranked) requires it. Real analysis is also especially important. In addition, classes in proof writing, probability, and differential equations are extremely useful. Ideally, you should double major in economics and math. If that’s not possible, then minor in math or at the very least pursue a mathematical emphasis within the economics major. You can even choose to major in math and minor in economics.
As part of your economics major, you should try to take courses in advanced econometrics, game theory, advanced microeconomics, and mathematical modeling (if these are offered). The 2005 American Economic Association (AEA) meetings included a panel on graduate admissions featuring members of admissions committees from top schools. As discussed by this panel, admissions committees pay particular attention to your performance in these courses. Your performance in intermediate microeconomics matters a great deal too. These courses also allow you to gauge your own fit for graduate school: if you enjoy and do well in them, you are likely to be a good candidate for graduate school.
Do as much research as possible: work as a research assistant for a professor, do a summer research project, and write an honors thesis. This will give you an idea of what academic research is all about. It will also let graduate schools know that you have an idea of what research is all about. Finally, it will allow you to develop a relationship with a professor, who can then write you a recommendation.
Your recommendations matter a lot. These letters should come from your professors: according to the AEA panel, letters from employers are not useful. Admissions committees look for comparative statements: “She’s the best student I’ve had in 5 years,” or “He’s as strong as our two other students who have gone on to top graduate programs recently.” By your senior year, you should know which professors are likely to make the strongest statements about you. Choose professors who know you well and in whose classes you have done well.
Study for the math GRE. It used to be that a perfect score (800) was necessary for admission to a top program; however, this no longer appears to be the case. The AEA discussion suggested that admissions committees now generally have a threshold math score of around 750 to 770. You must meet the threshold to be competitive, but exceeding the threshold doesn't add much value. Your verbal score is not very important – unless you are really terrible in verbal, you are generally better off allocating your time towards studying for math.
Your personal statement is not a place for flowery prose. Economists appreciate good technical writing. Describe why you are interested in graduate school, how your academic experiences have helped to prepare you, and what research topics you might pursue when you get there (don't worry – this isn't binding). According to one member of the AEA panel, "No epiphanies, please! No stories like: I was driving down the freeway and then the sky opened up and I heard a voice saying you should go for the Ph.D.!" Also, in describing your research interests, try to stay away from the hot topics of the day (e.g., the financial crisis). A topic that does not appear to come from news headlines signals a serious, thoughtful, long-term interest in that issue. Your statement should communicate to the committee that you understand what graduate school is all about and that you have carefully thought through your decision to pursue a Ph.D. If there are special circumstances that you need to explain (e.g., poor academic performance during a particular semester), this is the place to do it. Don’t be overly dramatic or apologetic – just state the facts.
As discussed in the AEA panel, an internship or job at the Federal Reserve (Board of Governors or regional branch) is a good signal that a student knows what s/he is getting into by going for the Ph.D. Another good signal is taking rigorous science classes (physics or chemistry).
Look at rankings of economics programs (U.S. News rankings, National Research Council rankings, and a variety of others). You and your faculty advisor should decide which schools you should target based on your interests and record. You should generally aim to attend the highest ranked program possible (taking into account the departments' strengths and weaknesses in particular fields). Down the road, employers will pay attention to the quality of your graduate program. Moreover, a lot of what you learn in graduate school will be from your classmates, as graduate students generally study together in groups and give each other feedback on research. Therefore, it helps to attend a program that tends to attract high-ability students. If you can't get into a highly ranked program based on your current record, an alternative approach is to spend a year or two working at the Federal Reserve (or doing another job that involves economic research), or getting a master’s degree in economics at the London School of Economics (LSE). (While most master’s-only programs in economics should be avoided, LSE is an exception: it offers respectable master’s-only programs.) This will give you a better shot at a top Ph.D. program.
Unlike JD or MD students, most economics Ph.D. students can finance their studies without borrowing or tapping into personal/family savings. Most Ph.D. students finance their degree by a combination of fellowships, research assistantships, and teaching assistantships. Your offer of admission may include a first-year fellowship covering tuition and a stipend for living expenses. If you are not offered a fellowship, you can choose to pay for the first year out of your own pocket. After the first year, students generally support themselves by working as teaching or research assistants. (These positions typically provide tuition and a stipend.) You should also apply for any outside funding for which you qualify. Outside funding sources include National Science Foundation Graduate Research Fellowships, Javits Fellowships, Ford Foundation Fellowships, and Soros Fellowships.
There are a number of resources that can help you prepare for graduate school, and make your make your transition to graduate school, as well as your time in graduate school, easier. Here are a few offered by the American Economic Association.
Further reading:
David Colander and Arjo Klamer, The Making of an Economist, Boulder: Westview Press, 1990.