Studying Business — The Academic Route: Choosing to Delay or Delaying to Choose
Going to a PhD directly after receiving a bachelor’s is a possibility; however, for many, it is not probable. Unlike some other fields, Finance and Economics do not require graduate-level education prior to starting a PhD. However, nearly every admissions website will list that it can be a boost to applicants’ profiles. This article will talk about a few paths to a PhD after receiving a bachelor’s degree.
To begin with, I would like to address the difference between US and European PhD programs. The past articles have been generally relevant to either with a focus on US programs. However, this one, in particular, is an example of the difference. In the US, it is common to earn a master’s degree en route to a PhD after taking a sufficient number of courses, passing preliminary examinations, satisfying a paper requirement, or some combination thereof. The first two, sometimes three, years of PhD in the US consist of coursework, with the entire program taking five or so years.
However, in Europe, this coursework requirement is nearly non-existent. As a consequence most PhD programs in Europe are shorter, lasting only three to four years. Although some universities do offer the “American” style of earning a master’s after two years for a total of five years, such as the London School of Economics (LSE), for the majority of programs in Europe, a master’s degree is required, serving as the equivalent of the coursework component here in the US.
However, for many students, a master’s degree can seem like a natural progression. There are some benefits to getting a master’s degree but also several downsides. In this regard, I will focus mainly on US programs.
To begin with, most master’s programs are one to two years. There are benefits and costs associated with each that may make a shorter or longer program more advantageous for certain students. However, as a general rule, I believe that two-year programs are better. First, note that not all master’s programs are created equal when it comes to boosting your odds at a PhD. Within Economics programs, most are created with the goal of helping their graduates to seek roles in industry rather than preparing them for a PhD. A few options that buck this trend are the University of Chicago’s MAPSS-Econ program, NYU’s MS Quantitative Economics program, the University of Texas at Austin’s MA Economics, and the University of Wisconsin-Madison’s own MS Economics — Graduate Foundations. It is not easy to sort these out; however, the best way is to read their websites and look at their placements. If the majority of students go to PhD programs, especially if the median placement is where you would like to go, it is probably worth your time to apply (see the next article on selecting PhD programs).
Other key indicators are whether the program allows its students to take PhD courses like both of UW’s Master’s, including the Master of Science in Financial Economics that I attend. This is good because while the program may or may not be set up to be a pre-PhD pathway, the option to turn it into one is there. This may also mean that you have a better chance of standing out and securing some of those coveted research opportunities and letters of recommendation discussed in the previous article. The other thing to note is that in the US, most of these programs are “revenue-generating” programs and will not be cheap, coming with limited, if any, financial aid. In addition, expecting grant programs from the FAFSA is not a good bet in graduate school. At most, you can expect federal work-study and unsubsidized student loans.
For many international students, getting a master’s is the norm as PhD programs may not be as familiar with foreign universities outside the very top. However, note that it is even more costly for foreign students who can expect to try to tackle immigration issues, an almost zero chance at financial aid, and a legal ban on working for the first semester, even on campus.
For domestic students, getting a master’s degree is a less common option. However, it is a good way to address certain weaknesses, like a lower GPA in the first part of an undergraduate degree or a late switch to economics/finance. I would argue that a master’s best strength is securing letters of recommendation and gaining additional research experience, especially if your prior undergraduate school was not research-intensive or lacked the opportunity to do research. This is the reason I generally recommend two-year programs, as it gives a year to do these experiences before the Ph.D. application cycle rolls around in the Fall of the second year. It can also be a good way to decide if the PhD life is right for you. The final reason could be to improve on the math background necessary for PhD, but there is likely a better option.
So far, I have only discussed a master’s in economics. Other master’s degrees are generally worse for the intended pre-PhD purpose. For example, MBAs, master’s in Finance, etc., are all normally just as expensive and convey little if any benefit to a pre-PhD student. However, a master’s in math or related fields can be even more beneficial than one in Economics despite a few caveats. First, while they are more effective at providing advanced math training, the prerequisite math training is almost certainly higher than for one in economics. It will require more dedication as math classes may not be as enjoyable to someone passionate about economics or finance with the need to constantly stay motivated by remembering their future goal. It can also be harder to secure valuable letters of recommendation from economics or finance professors, and the potential to take PhD courses is likely minimal. However, this can still be the right choice for some.
The final option is likely to be the best. It is the coveted predoctoral fellowship, also known as a predoc. Predocs are full-time research positions working under a professor. They are paid and give valuable research experience. It also allows students to form close relationships with faculty members who will eventually be able to write a strong letter of recommendation. However, predocs can be as hard to get into as PhD programs themselves. A valuable predoc would need to be at a top university or a Federal Reserve bank (or another government agency).
Most predocs can be found on PREDOC.org. At some universities, predocs may even take classes for free. The average duration is one to two years. Therefore, as it is paid, the opportunity cost can be lower than a master’s. It is a very common pathway for domestic students and is very beneficial if one can secure a position. However, some PhD programs that prefer independent research as opposed to assistant experience. As such, while predocs are somewhat popular right now, their benefit may soon diminish. Most predocs will require some research experience and list a preferred proficiency in one or more programming languages, with STATA, Python, and R being the most popular.
Finally, I will address the elephant in the room. What if I take a gap year? Taking a gap year is a common choice before starting undergraduate after high school. I would argue that it can even be a common choice after getting a bachelor’s degree. However, for someone who wants to get a PhD, it is, in my opinion, a big mistake. The issue lies mainly with the question of what someone should do during the gap year. Remember that when it comes to PhD admissions, letters from professors are the most valuable.
Taking a gap year without a specific plan that will contribute to a potential PhD application seems like a lot of risk with little return. Essentially as PhD applications are due at the end of the Fall semester and beginning of the Spring semester, there is not much time anyway. Remember that completing a PhD requires a lot of passion, motivation, and dedication, and in my humble opinion, taking a gap year without a plan may not be the best way to demonstrate that in an application for one.
These are some of the main options for students not going directly to a PhD after graduation. These options can be a good choice to allow extra time to decide if a PhD is right for you. For some students, the decision to take these extra years is obvious and necessary to enter a PhD program. For them, it is less about delaying a choice than delaying to have a choice. However, the big question is for students who have an admission offer to a PhD program already. Would I be better served by trying to improve my application or taking this offer? The choice is not easy, but hopefully the next article on selecting a PhD program will help to shed some clarity.
