Why No Stats Majors in Quant?

A subscriber asked the question, why are there so few statistics majors in Michigan's quantitative finance and risk management masters? From what have seen this seems common across other programs as well.

What else might surprise you is that there aren't very many CS students in Michigan's program either.

Let's talk about it!

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[vipulverma]

Hi Dimitri. Since am big fan of QF, I regularly view your videos in another google profile. Well said that Stats undergrads make least for FE class. They have lot of options like most popular Acturial science & Data science or marketing research. Traditionally a lot amongst them also pursued Masters in Economics, Econometrics or simply traditional Mfin program. However what they pursue matters least. The fact of matter is Stats majors are most appropriately equipped to go through all application of all stuff stochastic processes, martinangles, copulas and estimation in QF and RM

[jasonavina]

Another answer to the question, "why are there so few Statistics majors in the Quant Finance program?" might be two other reasons. 1) There aren't that many Statistics majors TOTAL compared to other majors. So if the percentage of Statistics majors from total majors is already less than say, Finance, Computer Science, Engineering, etc, then the percentage that apply to any given program such as Quant Finance, will also be smaller. 2) Statistics as a bachelors degree, is actually more useful, in terms of strictly obtaining a job after graduation, than say Finance, or Business, or even Mathematics with a non stat emphasis. So the total pool of Stats majors is already less, due to them already having jobs and not needing a Masters, unlike Finance majors, who mostly need to go back to school if they want to actually work in Finance.

[andresrossi]

What you're saying is also supported by the fact that stats and cs degrees are those with the lowest unemployment rate, so everything comes together

[prod.kashkari]

Hey Dimitri, thanks for the shout out and answering my question!

I was trying to give it some thought myself, but soon after I realized, even thinking about my situation as a statistics major and math minor, I just naturally have put statistics graduate programs on the top of my list from the beginning, so even I didn’t naturally think of quant finance programs. With the rise of “data science” programs too, a lot of stats folks also consider these programs as well so quant never makes the list. Also, I like to think of quant finance masters as these “applied math” masters programs, like you have even mentioned yourself. Even just looking at some of the courses an applied math masters have, they all have things like numerical analysis, differential equations etc, and quant finance programs seem to have these programs with an application to finance. Ie. Quant degrees are just applied math ms degrees with a finance flavor, and it makes a whole lot of sense why stats majors don’t consider them.

A typical statistics masters programs will have a sequence in mathematical statistics, linear model theory, stochastic processes, Bayesian methods, some applied courses, and other “rigorous” courses which have mathematical foundations, but for statistics concepts and an emphasis on statistical theory. In my mind, I think I just naturally felt that I’d rather tread waters in familiar territory at a graduate level than go into a program where I may have not seen math like numerical analysis, PDEs, or complex analysis. There is some overlap with quant programs and statistics programs probably, but I think with the thought of being in “safer” more familiar territory statistics majors may opt for the latter vs the former, since both programs are quite rigorous in their own way.

And for my friends who are cs majors, many of them just think about becoming software engineers in tech so their thoughts never go to quant finance either. Also, MS CS programs are good as well so for them it’s the same idea of treading water in safer territory.

I think a future video you could talk about is how people with operations research backgrounds can be useful in quant finance and if you see much impact with these masters degrees. I have some friends who are industrial systems engineering (ise) majors in college who take a lot of OR related courses and considering operations research masters programs to break into quant finance. Some of them feel like they get ignored amongst stats, math, and cs majors 😂.

[FGremlin]

My major at my school r n is Statistics and Quantitative Modeling. Proud to represent!

[ms]

Would an Actuarial undergrad typically fit the bill for mathematical rigour? I'm still working (patiently...) through a couple of the books you've recommended but I don't know if interviewers would really be able to verify what I know unless I go out of my way to take stochastic calculus at a master's level in final year. I've already completed a semester-long stochastic calculus module and earned a great grade; unfortunately though this was taught for undergrads meaning all the GOOD stuff like core proofs for Brownian motion and Stochastic Calculus in continuous-time was elegantly avoided.

[TundeBot]

Brilliant points 👍. When I saw the finance majors as 2nd at first I was like “There’s no freaking way” 😂

[samk]

Hi Dimitri, I graduated with an applied econ degree and I'd love to purse career as a quant or in the field of data science. After watching your videos and did some research myself, I started applying for masters degree in statistics specifically in Australia. I noticed that some stats master are under college of science or math while some are under college of business. Do you think that these statistics programs vary much? Like statistics master program under college of business and economics is not as good as the ones offered under math/science?

[matteogirelli]

I wonder why few people from maths, physics, stats etc. come into economics. It also is a brilliant field for applications of mathematics in model writing and solving and statistics in econometrics. There is also money to be made. Probably because there is a stereotype and less courses called "quantitative economics "

[jackt]

So would you still recommend stats over maths undergraduate for those aiming for quant?

[chadreads-yb]

is carnegie mellon's bscf program #1 for undergrad programs? is the bscf enough to get a quant role or would I need a masters too? Should I graduate as a sophomore with math/stats(not at cmu) or a junior with a BSCF (at cmu)?

[dAntony]

How common is a statistics undergraduate degree in the U.S.? Most schools I know of only have a mathematics major and stats minor or fairly small statistics department in general. I know some large big name schools have stats undergrad programs but I’m not sure how common it is in general. It’s *seems* like general mathematics is way more commonplace.

Personal anecdote, I had to do a mathematics undergraduate degree when I went back to school because they only offer a minor in statistics due to most of the faculty being pure math researchers. The ones who did teach stats were often busy doing consulting work on top of being a professor and some even left because the stats careers better than academia.

[anandhrajan]

Are there any good programs which accept the gmat? I scored 770 recently. I have a degree in electronics engineering and lots of programming experience but no exposure to finance whatsoever.

[sibusisomani]

Hi Dimitri, I have been working in Supply Chain Analytics for almost 8 years now and anticipating to switch careers, I have BSc(Mathematics & Physics) and BSc(Hons)(Medical Physics), I am accepted to study BCom(Hons)(Financial Modelling) and these are modules that will be doing:Forecasting, Stochastic Modelling, Financial Modelling. Is this a right path to breakthrough Financial Engineerinng master?

[myopinionman]

The might be a bit of a base rate effect here.

[uttambiswas]

Is Physics major or msc a good choice to enter into quant

[bbsara]

the math in quant finance isn't actually that hard. All of the market participants know how to value the securities. So if its worth X you want to buy it as much below X as possible. you don't get any alpha from knowing how to value the different derivatives since all the market participants know how to do it.

[Rick-lljz]

Hi Dimitri. I’m in my last year for physics undergrad. I want to go into statistics for my master’s. How do you think the background in physics would be helpful in the quantitative finance field?