Business economists perform quantitative analyses to produce data that allows business leaders to make better decisions and weigh future business strategies. Business economists use a number of methods to better understand and analyze current conditions, reflect on past business decisions, and predict the potential risks of pending decisions.
The analytical methods that managerial economists most often use include:
- Risk analyses
- Production analyses
- Pricing analyses
- Capital budgeting
Depending on the requirements of the business, business economics jobs may focus on the internal production methods or procedures, supply and demand curves, and investment decisions, just to name a few. Business economists may use a number of mathematical formulas and economic risk models, including the Nash game theory and the capital asset pricing model (CAPM).
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Businesses may also use business economists to determine how to best modify their business operations based on predicted shifts or changes in their industry or in the economy. In short, business economists allow businesses to assess the amount of risk they want to take or are willing to take.
What Kinds of Issues is a Business Economist Hired to Resolve?
Business executives, faced with increasing competition, complex industries and markets, and the globalization of the marketplace, must be equipped with as much knowledge as possible so as to make the most educated, thoughtful business decisions.
Business economists may help businesses solve any number of issues, including:
- How much of a product or commodity to purchase or the price of a product or commodity
- Whether or not to manufacturer a particular product
- How to produce a product (production techniques)
- How much inventory (product or raw material) to maintain
- How best to advertise or market
- How to compensate employees
- Where and how to invest
- How to best optimize staff, equipment, space and resources
Salary and Employment Projections for Business Economists
According to the United States Department of Labor, Bureau of Labor Statistics, the median annual salary for economists was $89,450 in May 2010, with the top 10 percent earning more than $155,490.
Employment in this profession is projected to grow by 6 percent from 2010 to 2020.
The industries employing the largest number of economists in May 2010 (and their median annual salaries) included:
- Scientific research and development services $109,720
- Federal executive branch $106,840
- Management, scientific, and technical consulting services $93,250
- Local government $69,950
- State government $61,620
The median annual salary for financial analysts was $74,350 in May 2010, with the top 10 percent earning more than $141,700.
Employment in this profession is projected to increase by 23 percent from 2010 to 2020.
According to the Robert Half 2013 Salary Guide, financial analysts earned between $64,250 and $83,250 in 2012 and are expected to earn between $65,250 and $85,250 in 2013, an increase of 2 percent.
Financial analyst managers of large companies earned between $84,200 and $114,500 in 2012 and are expected to earn between $86,750 and $119,750 in 2013, an increase of 3.9 percent.