The ‘discouraged-business-major’ hypothesis: policy implications

Abstract

This paper uses a relatively large dataset of the stated academic major preferences of economics majors at a relatively large, not highly selective, public university in the USA to identify the ‘discouraged-business-majors’ (DBMs). The DBM hypothesis addresses the phenomenon where students who are screened out of the business curriculum often choose an economics major as their alternative. This paper explains how DBMs were identified as a subset of economics majors and then examines how the presence of DBMs affects the quality of students in the economics program. In addition, potential changes affecting the number of economics majors are investigated such as the economics department joining the business school, raising the minimum entry Grade Point Average (GPA), or raising calculus or introductory microeconomics course minimum grade requirements. The dataset was compiled from the transcripts of all economics majors who graduated between Spring 1999 and Spring 2005, that is 436 students over 19 terms. DBMs constituted 42% of economics majors and, on average, underperformed relative to non-DBMs academically. Of the policy changes considered, joining the business school would have the greatest impact, reducing the number of economics majors by 83%, but raising the average GPA of majors from 2.70 to 3.43. Requiring a B– or greater in introductory microeconomics would reduce majors by 32.8% and raise the GPA from 2.70 to 2.82.

Keywords:

• discouraged-business-major
• economics enrollments

Acknowledgements

I am grateful to Chris Hannum for research assistance and Timothy Wunder, Geoffrey Schneider, and Tonia Warnecke for their valuable comments. I am also grateful to two anonymous referees and the editor of the journal.

Notes

The study does not compare the changes in enrollment in economics majors with the changes in demand for a business degree or how the presence of DBMs affects the demand for the economics major over time, which was the goal of the Salemi and Eubanks (1996) paper.

GPA is calculated using the following method. First, the total quality points are calculated by using the relationship: if the grade received is A+, there are 4.000 quality points per credit; for a grade A, 4.000 quality points per credit; for A–, 3.667 quality points per credit; for B+, 3.334 quality points per credit; for B, 3.000 quality points per credit; for B–, 2.667 quality points per credit; for C+, 2.334 quality points per credit; for C, 2.000 quality points per credit; for C–, 1.667 quality points per credit; for D+, 1.334 quality points per credit; for D, 1.000 quality points per credit; for D–, 0.667 quality points per credit, and for F, 0 quality points. The total quality points are the result of the multiplication of the quality points for a grade by the number of credits for the course for each course taken. Then we add up the total number of credits and the total number of quality points. Finally, we divide the total quality points by the total credits to calculate GPA. Thus, the GPA is within the range 0 and 4.000.

Only course titles would be used from this point onwards.

It can be argued that the lower grades awarded to economics majors are the result of a naturally severer standard of marking found in the economics department. Nevertheless, I am comparing between the different sub-categories of students of economics, and not between economics and business students. Hence, all students in economics under examination suffer the same severity in marking; if there is such marking, then there is no bias.

Unfortunately, we do not have the data to make predictions regarding increasing the standards of entry requirements to the business school. We could not gain access to any data about economics grades and GPAs for students outside of the economics program, as data were provided only by the economics department. Therefore, we do not know how many business majors would have been rejected if their standards were raised, for example, to a 3.1 overall GPA. Along the same lines, we could not make any predictions about how much the total number of business majors would increase if their standards were lowered, we can only make an estimate as to how many economics majors would be lost. In all likelihood, an increase in the already high-entry standards by the business school (a minimum of a 3.0 GPA at the time of acceptance, a minimum of a B– (2.66 GPA) in principles of microeconomics and in calculus for business) would further increase the DBM students resulting in an substantial increase in enrollments in economics and a substantial reduction in enrollments in business.

The economics department cannot reduce the standards of entry beyond the university requirement of a 2.0 overall GPA at the time of acceptance and a minimum of a C– in principles of microeconomics (C– is the pass grade for courses of the major).