In the early 1970s I voted, along with most of my economics colleagues at the University of Pennsylvania, for moving the economics department from its historic location in the Wharton School of Finance and Commerce to the newly established liberal arts college. How poorly we read our economic future! Then, as now, Penn was on a “revenue center” budget system in which a school's financial fate was driven by undergraduate enrollment. Over the next decade, the department watched helplessly as shifting enrollments endowed the business school with large profits while liberal arts became the university's loss center. It is not surprising that Penn's finance department, along with comparable departments in many other business schools, came to be a magnet for many of the most promising newly minted economists.
This anecdote exemplifies how even the personal lives of economists remain at the whim of forces only dimly perceived. From 1972 to 1987, among American colleges and universities, business enrollments soared as a proportion of total undergraduate enrollment. Except for incidental discussion in Ehrenberg (1991), this remarkable development has been almost wholly neglected in the economics literature despite its manifest impact on the functioning of institutions of higher education and the economy's labor supply. This chapter assembles and evaluates some pertinent evidence on reasons for this growth in the context more generally of the literature and evidence on occupational choice and choice of major by undergraduates.