"Students who majored in economics earned median wages at the age of forty of $90,000 in 2018. Students who majored in other social sciences earned only $65,000. Why the big difference? Selection or a causal effect of earnings? Zachary Bleemer and Aashish Mehta compare students at UCSD who just missed the grade cutoff to be able to major in economics with those who just made the grade. Making the grade causes a big increase in students choosing to major in economics and a big increase in their salaries by their mid-20s of about $22,000. Thus most or all of the observed differences in salaries by major appear to be causal. The increase in salary appears to be driven by a change in preferences that leads students with economics majors to specialize in high-wage industries."
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