Booth Tops 2015 Economist Ranking

The Darden School of Business at the University of Virginia

THE FORTUNES AND MISFORTUNES OF BUSINESS SCHOOLS ON THE ECONOMIST LIST OVER TIME

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.

Of the 100 ranked schools this year, 24 saw double-digit changes in their year-over-year positions on the list (see The Biggest Winners & Losers in The Economist’s 2015 MBA Ranking). The biggest gainer? The University of Florida’s Hough Graduate School of Business which climbed 22 places to finish 58th from 80th a year ago. The biggest loser to stay in the Top 100 was the European School of Management and Technology (ESMT) in Germany which plunged 23 spots to rank 49th this year from 26th in 2014. Seven schools which had failed to make the list last year showed up this time, including the No. 35 Eli Broad College of Business at Michigan State University and the No. 55 Carlson School of Business at the University of Management. Last year, Carlson declined to participate in the ranking. Michigan State was not ranked because The Economist said it provided limited data.

Yet, as volatile as the year-over-year Economist rankings are, they can be stranger over a few years. Consider Switzerland-based IMD, which as recently as four years ago was ranked third best in the world by The Economist. This year, IMD is a lowly 32, down 11 places from its rank of 21st last year. Or there’s York University’s Schulich School in Canada. It was ranked ninth best four years ago. This year? It barely makes the Top 50, coming in at 46th, down five places from a rank of 41 last year. Meantime, Australia’s Macquarie University in Sydney claimed the 28th best position this year. Three years ago, The Economist had the school 73rd.

‘GLOWING STUDENT ACCOUNTS OF ITS CAREERS SERVICE, FACULTY AND FACILITIES’

It gets worse–or better depending on one’s point of view. The University of Bath, ranked 20th by The Economist only two years ago, today places 64th. The highly regarded University of Southern California’s Marshall School, meantime, ranks 71st in this year’s survey. Four years ago, it was 22nd.

Oddly, The Economist devoted precious little editorial space to promote its ranking. The accompanying story in the print edition of the British magazine is all of two paragraphs long with a table on the Top 20 schools. It’s explanation for why Chicago Booth has topped the ranking for five of the past six years: “One reason for the school’s success is glowing student accounts of its careers service, faculty and facilities.”

The data published by The Economist shows that HEC Paris delivers the biggest percentage increase in pay over pre-MBA salary: a 148% pop, followed by 117% for Warwick MBA grads and 109% for IESE MBAs. In comparison, according to the data gathered by The Economist, Harvard Business School graduates saw only a 59% increase over their pre-MBA salaries.

AT WARWICK ONLY 82% OF GRADUATES HAD JOBS THREE MONTHS AFTER GRADUATION

The lower immediate return is largely the result of HBS students leaving jobs that pay significantly higher salaries than students at either HEC, Warwick, or IESE. But the reported disparities among the schools–which have important weight int he ranking–appear too large to be believable. The data is self-reported and only reflects salary and not total compensation. The increase for Stanford MBAs, according to the magazine, is only 52%. But Stanford and Harvard MBAs both are more likely to receive sign-on bonuses, other guaranteed compensation, and equity. That’s just one example of how The Economist‘s methodology fails to smartly measure the short-term gains of a school’s MBA degree.

More telling is that despite Warwick’s impressive showing in 18th place, fewer of its graduates actually had jobs three months after graduation than many of the schools ranked beneath it. In fact, Warwick’s 82% job rate was the worst of the Top 20 ranked schools and the only school below 90%. No. 19 Yale and No. 20 Duke boasted employment rates of 93% and 94%, respectively, significantly better than higher ranked Warwick. If GMAT is one measure of the quality of incoming students, moreover, Warwick posted the lowest average GMAT score of any top 20 school: 658. That is 63 points below lower-ranked Yale, where the incoming class has a 721 GMAT average.

(See following page for the 2015 ranking and how it compares over five years)