Economist vs. Actuary: What Are the Differences?

Economics and actuarial science are two distinct fields that share some commonalities. Both professions require strong analytical and math skills, and both are concerned with making predictions about the future. However, there are several key differences between economists and actuaries, including the type of work they do and the industries they work in. In this article, we discuss the similarities and differences between economists and actuaries, and we provide information on what you can expect from each profession.

What is an Economist?

Economists are social scientists who study the production and distribution of resources, goods, and services. They use data and mathematical models to analyze economic issues and develop forecasts. Economists work in a variety of fields, such as academia, government, and private industry. They may conduct research, provide consulting services, or teach courses in economics. Economists typically specialize in a particular area, such as microeconomics, macroeconomics, econometrics, or international economics.

What is an Actuary?

Actuaries are typically employed by insurance companies to design and decide which policies and premiums to charge for different companies. They carefully analyze each policy to ensure it’ll be profitable and beneficial for companies to utilize. Some Actuaries may work for consulting firms, government entities or pension companies handling their property, life, casualty and health insurance policies. Actuaries typically gather statistical data to analyze, then they present these findings to government officials, shareholders, executives or other clients. They often create and use charts or graphs to better explain their projections, calculations and new policy plans.

Economist vs. Actuary

Here are the main differences between an economist and an actuary.

Job Duties

Economists and actuaries share some job duties, such as researching data to help companies make business decisions. However, actuaries use the data economists provide to create predictive models that insurance companies can use to determine rates. In this role, actuaries ensure that insurance companies remain financially secure by minimizing risk. Economists don’t have a direct impact on a company’s financial stability because they work for a single company. Instead, economists research broad economic trends to advise governments and other large organizations about future business prospects.

Job Requirements

Economists typically need at least a bachelor’s degree to enter the field, though many pursue a master’s degree or doctorate as well. A bachelor’s degree in economics is the most common educational path for aspiring economists. These programs teach students about microeconomics, macroeconomics and econometrics, which are all important topics they’ll need to know to succeed in the profession.

Actuaries also need at least a bachelor’s degree to enter the field. Many actuarial science programs exist, but students can also major in mathematics, statistics or another related field. It’s important for actuaries to have strong math skills, as they’ll use them often on the job. In addition to their degree, actuaries must pass a series of exams administered by the Society of Actuaries (SOA) to earn professional certification.

Work Environment

Economists and actuaries work in different environments. Economists typically work for the government, universities or private companies. They may also work as consultants to help businesses make decisions about their operations. Actuaries often work for insurance companies, where they evaluate risk factors and determine premiums. Some actuaries work for banks, evaluating financial data to help them make lending decisions.

Both economists and actuaries spend most of their time working in an office environment. However, actuaries may travel more frequently than economists because they often visit clients’ locations to collect data.

Skills

Both economists and actuaries use analytical skills in their jobs. Economists analyze data to understand economic trends and develop theories about how the economy works, while actuaries analyze data to assess risk and predict financial outcomes.

Both of these professions also require excellent math skills. Economists use math to calculate and interpret economic data, while actuaries use math to calculate the probability of events occurring and the potential financial impact of those events.

Economists typically need strong research skills to collect and analyze data, as well as writing skills to communicate their findings in reports and papers. Actuaries need similar research and writing skills to collect and analyze data and communicate their findings to clients. However, actuaries also need strong problem-solving skills to identify creative solutions to mitigate risk.

Salary

The average salary for an economist is $94,244 per year, while the average salary for an actuary is $124,755 per year. Both of these salaries can vary depending on the type of company you work for, your level of experience and your location.