The Economist’s 2016 MBA Ranking Is A Doozy

For the fifth consecutive year, the University of Chicago’s Booth School of Business claimed first place in The Economist’s global ranking of MBA programs.

But Booth’s steadiness at the top of the new 2016 ranking belies the absolute chaos beneath it. This year, 28 out of the Top 100 ranked MBA programs experienced double-digit increases or declines. Some schools fell by more than 30 places in a single year, while others rose more than 20 spots. At least a dozen schools climbed by double-digits. Even among the Top 25 schools, where business school rankings tend to be far more stable, the average movement for an MBA program this year was slightly more than 4.1 places up or down.

Given the volatility of The Economist’s ranking, there will be a good number of deans who will be popping champagne corks today—and probably a much larger number tearing the hair from their heads. Among the elite schools with the biggest gains are Northwestern University’s Kellogg School of Management which gained five spots to finish in second place, the school’s best showing since 2004 when Kellogg placed first. Only three years ago, The Economist claimed Kellogg’s MBA program was 23rd best in 2012. The upshot, if you can believe it: Kellogg has risen 21 places in three years.

BIG TOP 25 WINNERS INCLUDE STANFORD, UNC AND IMD

Stanford University’s Graduate School of Business, which achieved its best rank of second place in 2007, climbed eight places to finish fifth, its best showing in eight years. The Kenan-Flagler Business School at the University of North Carolina moved up 11 spots to rank 22nd, it best Economist ranking ever. In 2008, the school was ranked 49th. Oddly, Switzerland-based IMD, which refused to participate in this year’s ranking after a precipitious 11-place fall in 2015, recovered lost ground by ranking 23rd, a nine-place improvement over its 2015 rank of 32 but still far from its first place showing in 2008.

The hair pullers, on the other hand, will be led by the deans at ESADE, which was in a free fall dropping 33 places to a rank of 54th and the Indian Institute of Management at Ahmedabad, which lost 32 places to finish 92nd. Only three years ago, in 2013, ESADE was ranked 16th best in the world by The Economist. The most consequential drop for an elite business school was felt by New York University’s Stern School of Business, which lost eight places to end at a rank of 19th, the biggest drop for a Top 25 MBA program.

And where in the world are Harvard, Wharton, INSEAD, and London? The Economist claims HBS is fourth best in the world behind Booth, Kellogg, and the University of Virginia’s Darden School of Business. Wharton is ranked 12th, down two places from a year earlier, right behind No. 11 Columbia Business School. INSEAD, which this year was ranked first by The Financial Times, dropped five places to 13th, well behind No. 8 IESE Business School in Spain and No. 9 HEC Paris. London Business School’s MBA program barely made the Top 25, sneaking into the 25th position, a fall of one place from last year.

WHY ARE THE RESULTS SO QUIRKY?

The often quirky results of this ranking–like all rankings–are fundamentally due to its methodology. While it is similar in some ways to the ranking by The Financial Times, its results are often dramatically different. Both of these British-based publications produce rankings that are global in scope and weigh several factors that tend to favor non-U.S. schools. But The Economist examines the most criteria—21 different metrics in all versus the 20 at the FT, from the diversity of the on-campus recruiters to the range of overseas exchange programs. Compensation and career placement are heavily weighted, including starting salaries, pre-MBA versus post-MBA pay increases, and the percentage of graduates who land jobs through the career management center. Pay and placement account for 45% of the methodology.

The one big difference with The Financial Times is The Economist’s rather significant reliance on student satisfaction, gathered by an annual survey of current MBA students and recent alumni. They’re asked to rate the quality of the faculty, the career services staff, the school’s curriculum and culture, the facilities, the alumni network, and their classmates. The methodology takes into account new career opportunities (35%); personal development/educational experience (35%); increasing salary (20%); and the potential to network (10%). The figures are a mixture of hard data and the subjective marks given by the school’s students who are surveyed by the magazine.

Measuring MBA programs on those dimensions should insure that Harvard, Stanford, Wharton and London Business School do well. Yet surprisingly, year after year they tend to lag in The Economist ranking. In the 15 years that The Economist has done its MBA ranking, Chicago Booth has claimed the both first place wins, racking up seven. Kellogg and IESE are both tied with three No. 1 victories, while Dartmouth’s Tuck School of Business and IMD have each claimed the top spot one time in 2011 and 2008, respectively.

HARVARD, STANFORD & WHARTON HAVE NEVER BEEN NO. 1 FOR 15 YEARS STRAIGHT

Oddly, Harvard, Stanford and Wharton have never topped this ranking. There are many explanations for this, including the likelihood that students and alumni who complete The Economist‘s survey are cheerleading for their schools, the sample size of the surveys, and the fact that some schools have dropped out, refusing to participate in the ranking because they believe it lacks credibility. IMD and the University of Oxford both tried to adopt that strategy this year, but The Economist deemed the schools so important that it ranked them based on publicly available data and older student surveys (see IMD Tries To Pull Out Of Economist Ranking).

Generally, wild swings in a ranking tell you less about the quality of a school’s MBA program than it signals about the methodology of the ranking itself. After all, schools rarely if ever change much year over year. In fact, a school’s standing should generally be fairly stable over even longer periods of time, unless there is an aggressive effort to boost a school or a scandal or mishap. So when there are unexplainable changes in a ranking, it’s more often a sign that the methodology is severely flawed and lacks statistical validation. Often times, for instance, the underlying index scores–which The Economist does not reveal–are so close together that a minute, inconsequential change in one measurement can send a school soaring or plummeting.