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.