@Austin_J_Foster is a math major. He asked me to comment on the role the College of Business Administration should play in his studies. More generally, Austin wonders: “Are STEM students lacking without business courses?”
Austin, your income potential and financial future ultimately depend on your ability to add economic value. This is what employers pay people to do and it is what businesses extract as profit. The better you understand the value creation process, the more likely you are to make a significant economic contribution and the more money you are likely to accrue either as an employer or as an employee. Many people with great technical skills have a deep understanding of the logic of their chosen field of science but lack a “market mindset.” They do not understand the value creation process and can spend a great deal of time making “discoveries” that have limited commercial value. (This drives employers crazy.) I have written on this topic in a prior blog post. See “Slaying the Beast” by clicking here.
Similarly, applying your skills in areas you don’t fully understand can lead to errors with massive consequences. Since you are a math major, let me give you an example from your world.
This is the Black Scholes equation. It is used to determine the value of derivatives. It won two people the Nobel Prize in economics. It is also blamed for causing the financial crisis we are still digging out from. (Google it and you can read on for weeks.) The problem had nothing to do with the math. The math is solid. The problem came about because some of the conditions on which the model is predicated didn’t hold in the real world. Many people using the formula didn’t understand this.
The lesson for an aspiring mathematician is this: You have a very powerful tool. Math geeks are taking over the universe, including business. But, just because you can do the math, doesn’t mean you understand the substance of what the math represents. Math isn’t done in a vacuum. It is applied to a specific context. You need a deep contextual understanding to ensure that your model conforms to the “real world.” The real world feels no obligation to conform to your model. So if you want to apply math to the economy or business, you need to understand this world.
By now, you are probably thinking: “Gee, Dean Jarley, I only wanted to know what business courses people like me might take to complement my interest in STEM.” If so, fair enough! It comes down to trying to develop that “market mindset” I mentioned earlier. A good start would be two courses in economics (micro and macro), a course in finance and one in marketing. This will give you a sense of how markets work and how firms respond to market signals. If you want more, consider our entrepreneurship minor. It is designed to help STEM majors understand the business creation process.
Good luck to you Austin, and thanks for the great question.
Paul Jarley, Ph.D., is the dean of the UCF College of Business Administration. He blogs every week at https://business.ucf.edu/person/paul-jarley/. This post appeared on July 8, 2013. Follow him on Twitter @pauljarley