Econ Majors Score Well on the GMAT Too


Download Econ Majors Score Well on the GMAT Too


Preview text

Econ Majors Score Well on the GMAT Too!
Paul A. Nelson Associate Professor of Economics and Engineering Management
[email protected] And
Terry D. Monson, Professor of Economics [email protected]
School of Business and Economics Michigan Technological University
1400 Townsend Drive Houghton, MI 49931 FAX: 906-487-2944
Abstract Nieswiadomy (1998, 2006) found that economics majors scored well on the Law School Admissions Test (LSAT). Since about four times MORE economics majors take the Graduate Management Admission Test (GMAT) than the LSAT, the authors address a similar issue, how well do economics majors perform on the GMAT? They find that the average GMAT score for economics majors is higher than that for any other large (2,200 or more test-takers) humanities and arts, social sciences, or business undergraduate major. However, the GMAT's quantitative content makes it not surprising that science, engineering and mathematics majors have higher average scores than economics majors. Most likely, the analytical rigor of economics courses, the broad nature of economics curricula, and brighter students' self-selection of an economics major combine to contribute to their relatively high performances on the GMAT and the LSAT.
Key Words: economics majors, MBA programs, GMAT scores JEL code: A20
Electronic copy of this paper is available at: http://ssrn.com/abstract=960088

Introduction Michael Nieswiadomy (2006, 1998) found that economics majors perform
admirably on the Law School Admission Test (LSAT). Many economics majors also pursue graduate management studies leading to the MBA degree. To do so, they must take the Graduate Management Admission Test (GMAT).i About 1,100 programs worldwide use the GMAT, of which 800 require it for every applicant. Since MBA programs enroll more students than law programs, there are approximately twice as many GMAT test-takers than LSAT test-takers.ii Further, economics majors are roughly four times more likely to take the GMAT as the LSAT.iii
How well do economics majors perform on the GMAT? To respond to this question, we examined average GMAT scores by undergraduate major between 1995/6 and 2004/5 and found that, like the LSAT, economics majors scored higher than most other undergraduate majors. How Do the GMAT and LSAT Differ?
The GMAT and LSAT differ in the composition of their test-takers, their contents, and their reporting of scores.
Students taking the LSAT have more diverse undergraduate backgrounds than those taking the GMAT. Political science majors represented the highest proportion (16 percent) of LSAT test-takers in 2002-3 while only 5 percent were business and accounting majors and 11 percent were science, engineering, and mathematics majors (Nieswiadomy, 2006, Table 3). In contrast, business and science/engineering/mathematics majors represented about 80 percent of GMAT test-takers over the period examined in this paper. Table 1 gives the average annual number of GMAT test-takers by undergraduate major and their percentage shares during 2000/1 to 2004/5, as well as their weighted average GMAT scores (weights are shares of each major in the total for each year).
Over one-half were business majors; slightly more than one-fourth were science, engineering, or math majors, slightly more than one-sixth were social science majors (of which economics represented one-half); and the rest were from other disciplines.
Electronic copy of this paper is available at: http://ssrn.com/abstract=960088

Because most GMAT test-takers are business, science, engineering, or mathematics majors, the Graduate Management Admissions Council (GMAC) reports fewer major categories than the Law School Admissions Council (LSAC). The GMAC reported just 30 majors (including 'other' categories, e.g., 'other social sciences) from 1995/6 to 1999/0; 37 from 2000/1 to 2001/2 and 42 from 2002/3 to 2004/5 (six majors were added and one was eliminated in 2002/3). The LSAC provided data on 151 majors taking the 2002/3 LSAT (Nieswiadomy, p. 245).
The contents of the GMAT and the LSAT are similar in most respects other than the GMAT's greater focus on quantitative skills. Both are intended to measure general aptitudes for professional study. Both measure reading comprehension and critical thinking skills and contain essay sections. The GMAT's quantitative section requires knowledge of algebra and geometry (a rigorous four-year high school mathematics curriculum is more than adequate preparation). The LSAT's analytical and logical reasoning sections perhaps require more sophisticated skills. However, the GMAT's quantitative section suggests that science, engineering, or mathematics majors should score higher than majors having less exposure to basic mathematics.
The scoring systems of the two tests also differ. The GMAT uses a scale of 200 to 800 while the LSAT uses a scale of 120 to 180. Table 2 summarizes the scoring system. To put this system in perspective, students entering Business Week's top ten rated full-time MBA programs in fall 2004 scored, on average, at about the 92nd percentile (an average GMAT of 700 compared to a 50th percentile GMAT of 540).iv The GMAT Performance of Economics Majors
GMAC (various years) provides information on the number of test-takers and average GMAT scores for each major in each year between 1995/6 and 2004/5. From this information, we calculated weighted average GMAT scores for each major for the first (1995/6 to 1999/0) and second (2000/1 to 2004/5) fiveyear periods. The weighted averages smooth any extreme values that may have occurred, especially for majors in which there were relatively few numbers of test-takers. The right hand column of Table 1 gives the weighted average GMAT

scores by major over the last five years. Average GMATs by major in the earlier period are not reported here since they are similar to, but slightly lower than, the 2000/1-2004/5 averages (the weighted average GMAT score of all majors rose by 1.6 percent from 521.4 to 529.6 between the first and second-five year periods).
With fewer GMAT-reported majors, we (unlike Nieswiadomy) ranked all majors in Table 3. Economics majors were eighth and ninth in the two five-year periods. Most likely, the GMAT's quantitative section contributed to the high positions of physics, math, engineering, other engineering/computer science, and chemistry majors. Philosophy, government, and history also scored well – as they also did on the LSAT.
In Table 4, we adopted Nieswiadomy's convention of comparing majors with large numbers (2,200 or more) of test-takers. Among these majors, only engineering and math ranked higher than economics. Like Nieswiadomy's LSAT rankings, the average economics GMAT score was higher than averages for all other large humanities, social sciences, and business majors.
Many economics programs are located in business schools. Business majors did not perform well on the GMAT. Their average GMAT score (503.6) was below averages for humanities and arts (542.9), social sciences (547.2), and sciences, engineering, and mathematics (572.2). The business average places them between the 35th and 40th percentile of all GMAT test takers and suggests that business school advisors might consider counseling students, especially brighter ones, planning to pursue MBAs toward an economics major rather than a business major. Summary
Economics majors perform well on both the GMAT and the LSAT. For both tests, we suspect that their relatively high performance is, in part, due to the analytical skills developed in economics courses and the broader nature of economics curricula (e.g., business courses typically represent one-half of requirements in business curricula while economics courses typically represent one-third of the requirements in economics curricula). However, we must

reiterate Niaswiadomy's cautions that economics majors are a self-selected group and that the GMAT data do not identify characteristics of economics majors themselves that most likely cause higher standardized test results.v

Table 1. Average Annual Number of GMAT Test-Takers by Undergraduate

Major, Percentage Shares, and Average GMAT Scores, 2000/1 to 2004/5

Major

Number % of total

Average GMAT

Humanities/Fine Arts

9211

5.2%

542.9

Art History*

137

0.1%

561.2

English

2936

1.7%

554.7

Fine Arts

946

0.5%

499.2

Journalism*

560

0.3%

514.1

Languages

1756

1.0%

538.5

Philosophy

609

0.3%

574.2

Other Fine Arts*

888

0.5%

499.8

Other Humanities

2096

1.2%

534.2

Social Sciences

32805

18.5%

547.2

Anthropology

283

0.2%

556.1

Economics

16171

9.1%

563.3

Education

998

0.6%

491.7

Government

542

0.3%

571.1

History

2159

1.2%

564.1

Law

1671

0.9%

540.8

Political Science

4029

2.3%

536.4

Psychology

3317

1.9%

520.4

Sociology

1416

0.8%

502.6

Other Soc Sci.

2215

1.2%

528.4

Sciences, Engineering, Mathematics

48268

27.2%

572.2

Agriculture*

286

0.2%

498.3

Architecture

688

0.4%

533.7

Biological Sciences

4512

2.5%

554.7

Chemistry

1780

1.0%

566.8

Computer Science

7105

4.0%

559.5

Engineering

25507

14.4%

582.5

Mathematics

2017

1.1%

590.5

Medicine/Nursing*

543

0.3%

513.0

Physics

1048

0.6%

611.5

Statistics

430

0.2%

555.9

Other Engineering/Computer Science*

3056

1.7%

580.9

Other Science/Math

2854

1.6%

526.5

Business

94512

53.2%

503.6

Accounting

22757

12.8%

508.2

Actuarial Science*

116

0.1%

557.7

Business Education

5606

3.2%

500.1

Finance

19101

10.8%

533.0

Hotel Administration

973

0.5%

473.3

International Business

4216

2.4%

503.9

Management

15126

8.5%

484.9

Management Information Systems

3982

2.2%

502.8

Marketing

11766

6.6%

480.6

Operations/Production Management

1138

0.6%

555.0

Other Business

9779

5.5%

Other Fields

8332

4.7%

Total

193128

100.0%

* indicates that averages were based upon data for 2002/3 to 2004/5 only.

491.7 494.5 529.6

Table 2. Percentiles for Selected GMAT Scores (Based upon 2004/5 results)

GMAT Score 750 715 680 640 600 540 510 470 430 380

Percentile 99% 95% 90% 80% 70% 50% 41% 29% 19% 10%

Table 3. Rankings of Average GMAT Scores by Major, 1995/9 – 1999/0 and 2000/1 – 2004/5

Major
Physics Mathematics Engineering Philosophy Other Eng/CS Government Chemistry History Economics Biological Sciences English Art History Computer Science Actuarial Science Anthropology Statistics Op/Prodn Mgmt Law Languages Other Humanities Political Science

1995/5 1999/0
1 2 3 4
5 6 7 8 9 10
11
12
13 14 15

2000/1 2004/5
1 2 3 5 4 6 7 8 9 16 17 10 11 12 13 14 15 18 19 21 20

Major
Other Soc Sci. Architecture Finance Psychology Other Sci/Math Journalism Medicine/Nursing Accounting Int'l Business Man Inf. Systems Other Fine Arts Fine Arts Sociology Agriculture Other Business Business Edn. Industrial Rels. Education Management Marketing Hotel Admin.

1995/5 1999/0
16 17 18 19 20
21
22 23
24 25 26 27 28 29 30

2000/1 2004/5
24 22 23 26 25 27 28 29 30 31 34 35 32 36 37 33
38 39 40 41

Table 4. Rankings of Average GMAT Scores by Majors with 2,200 or More Annual Test-Takers, 1995/9 – 1999/0 and 2000/1 – 2004/5

Major
Mathematics Engineering Other Eng/CS Economics Biological Sciences English Computer Science Political Science Other Soc Sci. Finance Psychology Other Sci/Math Accounting Other Business Business Ed'n. Int'l Business Man. Inf. Sys Other Majors Management Marketing

1995/6 -1999/0 rank
1 2
3 4 5 6 7 8 9 10 11 12 13 14
15 16 17

2000/1 - 2004/5 rank
1 2 3 4 6 6 5 8 10 9 12 11 13 18 16 14 15 17 19 20

Preparing to load PDF file. please wait...

0 of 0
100%
Econ Majors Score Well on the GMAT Too