The STEM Student and Business

@Austin_J_Foster is a math major. He asked me to comment on the role COBA 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. Information on it can be found by clicking here.

Good luck to you Austin and thanks for the great question.

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2 thoughts on “The STEM Student and Business

  1. This is a very interesting discussion, and a trend that I have noticed myself. Like Austin, I started my career here at UCF as a Mathematics major. I was initially drawn to how mathematics can so easily permeate a wide variety of disciplines, from the golden rule in art, to building an aircraft engine. What frustrated me however, was the overwhelming amount of academic “theory” I was taught going into my upper classes. I already knew that I wanted to go more of the Applied route, but felt that the need for proofs and 3-D modeling was not in the direction I was looking for.

    After a menu of different majors, I found that finance/accounting was more practical, and that adding a minor in computer science helped me to stay within the STEM area. I feel that a new generation of engineer/business people, is definitely what this country needs to be competitive in the 21st century. The world is growing smaller and smaller and computer systems are running more and more of the global markets. Even in the finance industry, a sizable portion of all trades are automated based on preset buy and limit orders, the markets are becoming more and more controlled by sophisticated software programs. Understanding these programs is paramount, it is no longer enough to just know the field, you need to be able to integrate with it.

    I look forward to seeing more business majors with STEM minors, and more engineering majors with business minors, since both would have their own concentration but also be able to better communicate with each other. I would also suggest, being a recent graduate of the UCF “Cornerstone” course, that all STEM students should consider that class to improve their skills in bringing their knowledge to the market and being able to read what the market wants.

    • Building the bridges you discuss across disciplines is a college goal.

      Theory is a very important part of the education process. It is how we extend knowledge in a rigorous way. Doing this is how fields advance. That said it is equally important to understand the application of theory. At the end of the day, knowledge is only valuable if it influences what you do.

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