Stanford GSB | Mr. Failed Entrepreneur
GMAT 750, GPA 3.7
Stanford GSB | Mr. Immigrant Entrepreneur
GMAT 750, GPA 3.8
Stanford GSB | Ms. Education Non-profit
GRE 330, GPA 3.0
Wharton | Mr. Fintech Entrepreneur
GMAT 710, GPA 3.04
Yale | Ms. Business Start-Up
GRE 312, GPA 3.6
Cornell Johnson | Mr. Cornell Hopeful
GMAT Targeting 700+, GPA 2.5
INSEAD | Mr. Aerospace Manufacturer
GMAT 740, GPA 3.7
Harvard | Mr. Big Fish, Small Pond
GMAT 790, GPA 3.88
Said Business School | Ms. Ordinary Applicant
GMAT 710, GPA 3.37
Tuck | Mr. Crisis Line Counselor
GMAT 700, GPA 3.1
Harvard | Mr. Banking To Startup
GMAT 760, GPA 3.7
Stanford GSB | Mr. Digital Engineer
GMAT 700, GPA 2.7
Harvard | Mr. M&A Post-Startup
GMAT 710, GPA 3.6
Harvard | Mr. IB/PE To Fintech
GMAT 740, GPA 3.14
USC Marshall | Mr. Supply Chain Guru
GMAT GMAT Waiver, GPA 2.6
Wharton | Mr. Master’s To MBA
GMAT 760, GPA 3.4
McCombs School of Business | Mr. First-Time MBA
GRE 332, GPA 3.3
USC Marshall | Mr. Versatile Entrepreneur
GMAT 710, GPA 3.3
HEC Paris | Ms. Public Health
GMAT TBD, GPA 4.0
Chicago Booth | Mr. Music Into Numbers
GMAT 730, GPA 3.8
Wharton | Mr. Top Salesman
GMAT 610, GPA 4.0
MIT Sloan | Mr. Latino Insurance
GMAT 730, GPA 8.5 / 10
Stanford GSB | Mr. MBB/FinTech
GMAT 760, GPA 3.7
INSEAD | Mr. Sailor in Suit
GMAT 740, GPA 3.6
Stanford GSB | Mr. Startup Founder
GMAT 700, GPA 3.12
Stanford GSB | Mr. Tesla Intern
GMAT 720, GPA 3.9
Harvard | Ms. Comeback Kid
GMAT 780, GPA 2.6

The Alarming Decline Of The MBA’s ‘Value Added Ratio’

Dartmouth Tuck Dean Matthew Slaughter

A DIFFERENT VIEW OF THE RATE OF RETURN ON THE MBA

This is true across many of the most highly ranked schools. Earlier this year, for example, Tuck received a $15 million donation from Paul Raether, a 1973 alum, and his family in support of scholarship funding—and 2017 was a banner year for scholarship fundraising at the school, with $20 million raised by year’s end. Even before this big fit came in, the market value of Tuck’s scholarship endowment had been $87.6 million at the end of the school’s fiscal year in June.

Rather than focus on the hard numbers, Tuck Dean Matt Slaughter sees the value of the degree very differently. “As an economist,” he says, “I think about the rate of return of a business school like Tuck as having three important components. One is global. We live today in a world where the real interest rate on all investments—one of which is an MBA education—is lower than it was in earlier decades. This trend was gathering before the World Financial Crisis and has continued in the decade since, and it is driven by a set of deep and wide forces we only partly understand.

“A second component is particular to all of higher education. For decades, higher education has realized less innovation and productivity growth than have other industries. And yet, we are an industry whose most important asset is talent: great students, thought-leading faculty, and skilled administrators. This combination tends to drive up the cost of education faster than the rate of general price inflation.

‘THE STRENGTH OF THE MBA DEGREE ENDURES’

“And a third component, which applies to Tuck and schools like it, is, What is our strategy, and how do we bring to life that strategy in a way that delivers as high of value as possible? No one can foresee perfectly the future demand for the MBA degree by people and companies.”

In the end, a ratio may not really matter. There has been salary compression in just about every field, regardless of the degree you have. But as Slaughter notes, “The strength of this degree endures, in part because its skills are so applicable around our dynamic world and because there continues to exist in this world the need for skilled and principled leaders.”

About The Author

John A. Byrne is the founder and editor-in-chief of C-Change Media, publishers of Poets&Quants and four other higher education websites. He has authored or co-authored more than ten books, including two New York Times bestsellers. John is the former executive editor of Businessweek, editor-in-chief of Businessweek. com, editor-in-chief of Fast Company, and the creator of the first regularly published rankings of business schools. As the co-founder of CentreCourt MBA Festivals, he hopes to meet you at the next MBA event in-person or online.