Wharton Tops Forbes’ Ranking For First Time

The University of Pennsylvania Wharton School – Ethan Baron photo

For the first time ever, the University of Pennsylvania’s Wharton School was named as having the best MBA program in the U.S. by Forbes magazine. Wharton rose six places from seventh in Forbes’ last ranking to capture the No. one spot, toppling Stanford from its previous perch and jumping over other prestige MBA programs including Harvard, Northwestern Kellogg, and Columbia Business School.

This is the second time this year that Wharton has moved to the No. 1 spot in one of the more influential rankings. Wharton also tied with Harvard Business School in this year’s U.S. News’ annual ranking of the best U.S. MBA programs published in March. It was only the second time in 28 years that Wharton fought its way into a tie for first place with Harvard Business School.

On today’s (Sept. 25) Forbes list, Wharton had never ranked highly than second, in 2001 and 2005, over the 20 years that the magazine has cranked out MBA rankings. Wharton climbed to the top in the biennial Forbes ranking largely because of a methodology that takes into account the cost of living in its calculation of the return on investment on the degree, the sole basis upon which the Forbes list is based. MBA graduates in Wharton’s Class of 2012 reported current total median pay of $225,000, the highest of any school in the world, according to Forbes. The estimated five-year MBA gain for Wharton grads was $97,100.


That was $10,000 more than Stanford’s graduates in the Class of 2012 who earned $215,000 in median annual compensation. The numbers, however, are adjusted for the cost of living, a factor that disadvantaged Stanford in the Forbes ranking due to the exorbitant cost of living in the Bay area, where the majority of Stanford graduates live and work. Stanford’s five-year MBA gain is $92,500, which is boosted by hefty stock options. One-third of Stanford respondents from the Class of 2012 reported receiving options with a median value of $380,000. Two years ago, Forbes reported that 37% of Stanford’s Class of 2010 reported getting stock options with a median value of $250,000.

With the exception of Wharton’s first place finish, there were relatively minor changes among the ranks assigned to the top ten U.S. schools. No. 2 Stanford, No. 3 Harvard and No 4 Kellogg all slipped a spot to make room for Wharton. Dartmouth College’s Tuck School of Business managed to hold onto its fifth place rank from two years ago.

Columbia Business School dropped two places to sixth, while the University of Chicago’s Booth School of Business slipped one place to seventh. MIT’s Sloan School of Management moved up a spot to rank eighth. UC-Berkeley’s Haas School dropped a space to finish ninth, while Cornell University’s Johnson Graduate School of Managment held on to tenth place, exactly where it appearred two years ago when Forbes last did a ranking.


London Business School ranked first on Forbes’ separate list for two-year MBA programs at non-U.S. schools. It was the fifth consecutive time that LBS came in first. Spain’s IESE Business School was right behind London for the fifth time in a row as well. CEIBS’ MBA program in Shanghai gained a rank of third, while No. 4 HEC Paris and No. 5 ESADE Business School rounded out the top-five non-US two-year MBA programs (see London, IMD Top Forbes Rankings Of Best International Business Schools).

Switzerland’s IMD Business School led the international list of one-year MBA programs by Forbes, with INSEAD a close second, following by IE Business School in Spain. The University of Cambridge’s Judge Business School came in fourth, while Italy’s SDA Bocconi took fifith place.

Unlike other rankings that take into account the quality of incoming students, their satisfaction with the MBA program and their immediate employment and salary, the Forbes list is based on the return on investment achieved by an MBA class that graduated five years ago. The dollars-and-cents calculations, measuring salary, bonuses and exercised stock options, place no value on the education, the faculty, the alumni networks, or any other factor that would generally measure the quality of an MBA program. In its novel approach, Forbes also assumes that compensation would have risen half as fast as students’ post-MBA salary increases if the graduates had not attended business school.


Forbes said it examined more than 100 schools and reached out to 17,500 Class of 2012 alumni worldwide, getting a 25% response rate on its alumni surveys. The magazine compared graduates’ earnings in their first five years out of business school to their opportunity cost (two years of forgone compensation, tuition and required fees) to arrive at a five-year MBA gain, which is the basis for the final rank. The average five-year gain at the top 25 schools was $70,100 or $8,400 more than two years ago. Schools whose alumni had response rates below 15% or a negative return on investment after five years were eliminated from the ranking.

But the numbers reported by Forbes are also adjusted to take into account cost-of-living expenses, and the earnings gains are discounted using a rate of 4.1% which is the discount rate most recently used by large companies in their pension funds. The magazine also discounts tuition to account for students who pay in-state rates and for scholarships and the non-repayable financial aid that schools dole out. Forbes does not deduct taxes from the earnings gains or account for the debt repayments from student loans

The methodology is largely based on self-reported data from MBA alumni who could inflate their compensation to help their schools score better on the list. Schools that place more students into high-paying finance jobs are also likely to do much better than schools where a higher percentage of students accept jobs in lower-paying sectors, including non-profits, the government, or education. The ROI calculation, moreover, is also subject to error based on the percentage of alums who complete and return the surveys to Forbes.

  • If only hiring managers gave rankings as much weight as applicants did 🙂

  • yalin

    It is the total package.

  • GammaX

    No body knows!

  • Stanford

    Booth No 7. Not so bad for a Nobel Prize winner I guess.

  • Romando

    Question: are the salaries 5 year out of the program basic salaries or packages?

  • Finance Prof

    @maas @ojo I understand your point of view, but I disagree that it’s unreasonable to factor in pre-MBA salaries. In order to evaluate the value of an MBA (or the value of a particular business school), you need to understand what the outcome would have been without an MBA. Imagine, for example, that you want to compare two schools that attract students with the same pre-MBA salary. Which one offers more value to the student? Ignoring intangible measures of value, it’s the school whose students earn the higher salaries after graduating, of course.

    While it’s impressive when schools can attract students who were highly paid prior to their MBA, perhaps these students didn’t need to get an MBA at all. For these high-performing individuals, the question of whether it’s worth going to business school at all is a serious one. Forbes’ methodology attempts to answer that question, and also attempts to address if a school offers its students incremental value or transformational value.

    Of course, Forbes’ methodology isn’t without its flaws. A school’s pre and post-MBA figures are obviously heavily influenced by pre and post-MBA industry (i.e. how many people come from finance or consulting). Financial Times’ ranking adjusts for this factor but does not adjust for cost of living. You could make a compelling argument not to adjust for industry: that you shouldn’t penalize a school for placing people in high paying industries. However, if I’m a consultant looking to switch to technology, I don’t care that a school’s salary increase is higher because it places a lot of people into finance. What I really want to know is what the salary increase is for people going from consulting to technology. This further illustrates the personal nature of business school decisions and why rankings are of limited usefulness.

    @ofo, responding to your point about changes across years: Forbes’ ranking is actually biennial. So Wharton’s movement from 8th to 1st reflects a 2-year change. That said, as the article notes, most of the other rankings stayed relatively stable, indicating that overall volatility in the ranking is fairly low.

  • J.Tell

    Wharton on a roll…I’m applying this year and hope it works out!

  • maas

    That is why Tuck and CBS are so high up in this ranking. They have a lower average Pre-MBA salary. Should be the opposite, high Pre-MBA salaries should be seen as a positive metric for the school.

  • ojo

    Yeah but penalizing schools with high salaries for incoming students is ridiculous. And you can never trust a ranking that moves schools so many places per year. Wharton was #8 in Forbes last year. Was Wharton’s class of 2012 suddenly a group of geniuses compared to the class of 2011?

  • ok..?

    confirmation bias is strong

  • Finance Prof

    Forbes set out to answer one key question: is business school worth the investment? Sure, there are numerous reasons to go to business school other than money (for example, the desire to make a social impact). But the value of these intangibles are difficult to quantify in an objective way. I don’t think Forbes is saying that money is the only thing that matters; however, financial considers are important for every decision we make in life, and Forbes’ ROI data helps us understand this decision from a finance perspective. Should you view it was a black and white analysis of which school is “better” than another? Absolutely not. You should use it as a starting point to add in your own perspective on the value of getting an MBA or going to a particular business school.

  • MBA34561

    Thanks John – got to say I rarely participate in these posts but this one just got me agitated because I genuinely believe that this methodology is terrible. Many people go to business school to make big salaries, but many people also go for future non-profit work, social enterprise, etc, etc.

    I just am looking forward to P&Q rankings and don’t want this to skew the whole thing.

  • ron

    nobody stays in the wilderness, but they go to the nearest big city- NYC or Boston. There they will make good money, but much of it can be eten up with the huge expense of being in NYC and paying 60 grand for rent.

  • That’s all great advice. Thank you for weighing in on this topic with a thoughtful and reasoned response. I couldn’t agreed more with your advice. In fact, if you read each of our takes on every ranking we do dig into each ranking’s methodologies and try to explain how the approach influences the result. Our composite ranking takes all five of the most important lists and not merely puts them together but does so on a weighted basis taking into account the credibility and authority of the methodology.

  • oto

    And not to mention the possibility of alumni inflating their earnings. Even though Forbes correctly got the M7 on top (and Wharton as #1 as well), the methodology is horrendous. I agree with “maas”, this list shouldn’t even be a factor in the Poets & Quants Rank. Even the dreadful FT ranking methodology is better than Forbes’. Just proves that the US News Rank is simply the only reliable one out there.

  • Fallacy

    SHDH is still used for b-school offices and some b-school classes. It’s not like they’re showing some completely random building. At any rate, it’s a red herring to disregard the ranking simply because they selected stock photography of SHDH instead of JMHH.

  • Reason, voice of

    Every ranking’s methodology has flaws; any time you attempt to distill complex items into quantifiable comparisons, you’re going to lose precision and context. Forbes’ ranking is certainly not without fault.

    However, Forbes does a lot of things right that other rankings don’t do as well on. Their methodology is grounded in the principals of finance (for example, it considers net present value and opportunity costs), uses objective data (none of the data is based on opinions as with other rankings), makes a reasonable attempt to equate data (for example, Forbes rightfully adjusts for cost of living), and is transparent and difficult to game (Forbes uses a random sample of data not controlled by the school). All of these features of Forbes’ ranking are very admirable compared to other rankings. And yet, of course there may be numerous intangible reasons why the #10 school may be a better fit for for you than the #1 school.

    My advice to everybody considering business school is to:
    1. Understand the limitations of rankings generally
    2. Dig into each ranking’s methodologies to understand how it influences the rankings
    3. Triangulate between different rankings and changes in rankings over time
    4. Use rankings as an approximate guide, not a clear-cut decision factor

  • The advantages of the Forbes ranking is that is it simple to understand, based on one metric, and fairly transparent, with the exception of the adjustments they are making on the comp data. On the other hand, it reduces one’s education to a dollars-and-cents equation when that is hardly a true measure of quality.

    You can only measure quality by looking at the credentials of the incoming students, measuring in some way the full academic experience of their MBA, along with the extracurricular opportunities that enhance that experience, the depth and breadth of the faculty and course offerings, and ultimately career outcomes, the most important of which is employment and then pay. So this look at MBA programs is fairly limited.

  • Spartan22

    Wharton was also #1 in the US News ranking, which is most often considered the standard. So I’m inclined to think it’s not some sort of fluke-their outcomes have been the best I’ve seen outside of Stanford the past few years.

  • lol please

    lol yeah keep telling yourself that….let me guess are you a boothie , CBSer or an SOMer? these places tend to be the most insecure amongst the lower tier schools for some reason.
    Whether you like it or not Wharton is very much a part of the top tier (HSW).

  • Terrible Ranking

    Agree. Terrible ranking. Absurd they can even publish this nonsense. Not only does it not make sense, but they do not even have the correct numbers to put in their grossly flawed methodology.

  • wharton lmao

    Wharton isn’t even that great – slipping prestige, dubious location, and similar job outcomes to supposedly “lower ranked” programs. What a joke

  • Hahaha

    Forbes is such a joke. It’s picture of “Wharton” is still SH-DH when the Huntsman building has been in existence since 2003.

    Makes you wonder how much effort they put into this joke of a ranking.

  • maas

    John I hope you discredit or at least minimize the weight of Forbe’s ranking on the 2017 P&Q Rank. Forbe’s ROI approach makes no sense!! What if a student gets scholarships/fellowships at different programs (or wealthy students who don’t care about tuition costs). You simply would want to pick the best
    overall school, not the best deal that wont even affect you. And hindering a school’s performance for having high starting salaries is counter intuitive, that should be seen as a plus (higher caliber students). And don’t get me started on valuing schools purely on returns, tons of people are looking to go into less lucrative industries than banking or consulting.

  • Chuck Taylor

    The 5-YR MBA gain formula makes no sense. Very weak correlation with the 2016 salary number

  • peter

    You can’t try to make this much logical sense of a piling of steaming garbage. They claim that they already tried to arbitrarily manipulate the data based on CoL. I’m sure it was done terribly. The huge changes from year to year in all the data and the rankings shows that it is a complete joke.

  • C. Taylor

    Standout performance by several US programs, notably Carnegie Mellon. The gap between ultra-elites and elites narrowed this survey. This is probably a trend that will continue if the ultras don’t increase their intakes.

    My initial impressions:

    1. Booth remains a leader but is weighed down by its exposure to Chicago–while it appears Kellogg may be seeing dividends from its Bay Area push. Chicago’s situation is a shame because Chicago is a fine city.

    2. Several European programs are still experiencing the aftereffects of the Euro crisis and, while performing solidly, are not yet surpassing earlier successes. London stands out here for consistently high performance–likely due in large part to its vantage in the heart of European capitalism. IESE and IE stand out for again posting the strong numbers one would expect. IMD? Still at the top.

    3. The Bay Area is cramped between regulations restricting high rises and those driving the cost of building a new house in CA above the level many can afford (105k is ‘low income’ and a roof costs 30k/year). But I’d wager Stanford’s slide is a hangover from its startup focus. Forbes doesn’t rule anyone’s (non)salary out that I can recall–unlike Stanford’s employment report. Just look at Haas’s rock star performance in comparison.

    4. CEIBS’ onslaught both confirms its standout performance and hints at its first calm in its storm on the rankings. If Xi can consolidate his base, it seems likely the ball will go on.

  • peter

    How do people trust these “media” sources when they just spew out hot garbage. A middle schooler could have used better logic and legitimate methodology to create a real ranking.

  • Nonsense

    This ranking is snake oil. There is so much arbitrary manipulation of the numbers. There is no way it can be deemed reliable or significant. After the insane manipulation many of these schools are within the range of error in Forbes’ approximations.

  • Truth

    The Forbes ranking is such a joke. I really enjoy the made up GMAT scores. I also love how Stanford’s salary went down by $40K in 2 years? HBS and other M7 schools also had big salary drops? And somehow Wharton is the only school with a huge salary gain? Where do they get this data? Maybe they just ask Wharton directly at a 40% response rate. The huge changes in pre-MBA salary from 2 years ago makes no sense either. I guess UC-Berkeley gets the world’s best students. haha

  • Whateven

    The table is messed up (25-50 repeated twice on page 3 and 4).
    Also, what sort of a garbage Ranking system is this? Always be HUGELY wary of rankings that see such big jumps and shifts in a given year. Nothing in the m7 moves that suddenly.

  • Spartan22

    This ranking seems about right from my own (anecdotal) experience using a pure financial ROI. I don’t notice any extreme outliers aside from Stern (lower than Texas A&M?)

    Booth’s midwest location is a drawback for this type of ranking, but how to explain Tuck and Cornell? I doubt anyone sticks around in the wilderness post MBA. I’m thinking these are 2 underrated programs, certainly from a marketing standpoint as I never hear about them.

    I think the methodology is still a little iffy (how do you NOT measure incoming student quality, yield, etc?) but can’t argue with the output. It’s like using the rule of 72. Can’t explain why it it’s so effective but it usually comes out pretty close.