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> The business-school community closely studies each school's “return on investment” or “value added” ratio—how much an M.B.A. degree adds to a person's salary,

by 1457389 12y ago

> The business-school community closely studies each school's “return on investment” or “value added” ratio—how much an M.B.A. degree adds to a person's salary, compared with how much it costs to obtain. At Dartmouth's Amos Tuck School, the nation's oldest graduate business college, tuition this year is $11,000, and the average starting salary for graduates is around $43,000. “That four-to-one ratio has been constant for at least the fifteen or twenty years. I've been aware of it,” Colin Blaydon, Amos Tuck's dean, says. Harvard also reports a four-to-one ratio, down from the heady seven-to-one ratio of 1969, but not so far that Harvard has any trouble filing its admissions quotas. Interesting. Ratio for recent years is roughly 2. [0] http://www.hbs.edu/about/facts-and-figures/Pages/mba-statistics.aspx http://www.hbs.edu/about/facts-and-figures/Pages/mba-statist...

optimusclimb 12y ago
>how much an M.B.A. degree adds to a person's salary, compared with how much it costs to obtain. At Dartmouth's Amos Tuck School, the nation's oldest graduate business college, tuition this year is $11,000, and the average starting salary for graduates is around $43,000. “That four-to-one ratio I find it interesting that at first that sentence talks about how much the degree "adds to a person's salary", but then pegs the ratio at "four-to-one". Assuming the person entering the MBA program already had a 4 year degree, their salary potential wasn't likely $0, i.e. it didn't move the needle by a 4:1 ratio. Factor in the interest on the loans, and the fact that the added salary (over their pre-MBA earning potential) would likely be taxed in the higher brackets, and I'd imagine the ratio jumps a lot lower. And still - intuition tells me that value add of an MBA, from a salary perspective, over a person's career - is still quite good.
- derf_ 12y ago
  Don't forget to add in the fact that you could have been earning that non-zero salary potential for two years instead of paying tuition... When I started my Ph.D., early on they ran the numbers with us. The increased starting salary from having a Ph.D. (probably somewhere in the $15...$20k range... I forget the exact number) will never make up for the four year head-start someone who stops at a Bachelor's degree gets on actually drawing a salary, once you discount to net present value (even when you factor in a graduate student's meager stipend).
  - tjradcliffe 12y ago
    Ergo, you should be doing a PhD for the love. The purpose of education is to make you a better human being, not to get you a job (that said, a PhD in an interesting subject can vastly increase your employment flexibility in ways you can't even imagine.)
- jackgavigan 12y ago
  > I find it interesting that at first that sentence talks about how much the degree "adds to a person's salary", but then pegs the ratio at "four-to-one". Assuming the person entering the MBA program already had a 4 year degree, their salary potential wasn't likely $0, i.e. it didn't move the needle by a 4:1 ratio. The Financial Times' MBA surveys assess the "Salary Increase" and "Value for Money" of various business schools. http://rankings.ft.com/businessschoolrankings/global-mba-ranking-2014 http://rankings.ft.com/businessschoolrankings/global-mba-ran...

by 1457389 12y ago

optimusclimb 12y ago

>how much an M.B.A. degree adds to a person's salary, compared with how much it costs to obtain. At Dartmouth's Amos Tuck School, the nation's oldest graduate business college, tuition this year is $11,000, and the average starting salary for graduates is around $43,000. “That four-to-one ratio I find it interesting that at first that sentence talks about how much the degree "adds to a person's salary", but then pegs the ratio at "four-to-one". Assuming the person entering the MBA program already had a 4 year degree, their salary potential wasn't likely $0, i.e. it didn't move the needle by a 4:1 ratio. Factor in the interest on the loans, and the fact that the added salary (over their pre-MBA earning potential) would likely be taxed in the higher brackets, and I'd imagine the ratio jumps a lot lower. And still - intuition tells me that value add of an MBA, from a salary perspective, over a person's career - is still quite good.

derf_ 12y ago
Don't forget to add in the fact that you could have been earning that non-zero salary potential for two years instead of paying tuition... When I started my Ph.D., early on they ran the numbers with us. The increased starting salary from having a Ph.D. (probably somewhere in the $15...$20k range... I forget the exact number) will never make up for the four year head-start someone who stops at a Bachelor's degree gets on actually drawing a salary, once you discount to net present value (even when you factor in a graduate student's meager stipend).
- tjradcliffe 12y ago
  Ergo, you should be doing a PhD for the love. The purpose of education is to make you a better human being, not to get you a job (that said, a PhD in an interesting subject can vastly increase your employment flexibility in ways you can't even imagine.)
jackgavigan 12y ago
> I find it interesting that at first that sentence talks about how much the degree "adds to a person's salary", but then pegs the ratio at "four-to-one". Assuming the person entering the MBA program already had a 4 year degree, their salary potential wasn't likely $0, i.e. it didn't move the needle by a 4:1 ratio. The Financial Times' MBA surveys assess the "Salary Increase" and "Value for Money" of various business schools. http://rankings.ft.com/businessschoolrankings/global-mba-ranking-2014 http://rankings.ft.com/businessschoolrankings/global-mba-ran...