Well, you pretty much had to know that if the schools which boycotted The Economist’s ranking last year came back, there would be a whole lotta shaking going on in the ranking. Sure enough, that is exactly what happened.
Year over year, this ranking was an absolute bloodbath for most business schools. Comparing the ranks of the schools that were on last year’s Economist ranking shows that 80% experienced double-digit changes in their positions on the ranking. In fact, nine MBA programs fell by 30 or more places, while 29 programs dropped 20 or more spots.
The results make it difficult to take this ranking too seriously because, as it turns out, the list doesn’t hold up to even a cursory level of scrutiny as we show below. No less worrisome, in several cases, school ranks and data on some metrics changed since the ranking was released, either because the editors went into the dataset to quietly correct errors or glitches with the ranking’s software.
In other cases, the data fails to support some of the conclusions made by The Economist. An example: The Economist says that MBA graduates from Rochester’s Simon School had the biggest salary increase over their pre-MBA pay levels when there are other schools that provided even bigger bumps in salary to their graduates. The increase for Simon MBAs was substantial, with alumni salaries that are 190% above pre-MBA pay, according to The Economist‘s data.
But MBAs at Michigan State, two ranks below Simon, saw salary increases of 225% based on The Economist numbers. Nonetheless, we’ve combed through the ranking and examined some of these underlying numbers. Here’s our take on the ten biggest surprises, shocks, and insights of the ranking.
1) What Really Separates Harvard, Stanford & Wharton
Few will question the fact that Harvard Business School sits at the top of this ranking. After all, most people believe that HBS provides the best overall MBA experience in the world. But few would believe that Stanford Graduate School of Business, which tends to win admits over HBS when they are admitted to both programs, could possibly rank below Duke Fuqua. HEC Paris, or even Wharton.
So what really separates these three schools in The Economist’s ranking? Not much, if anything at all. If the overall ranking causes surprise or shock, looking under the hood of the list will horrify you. That’s because very little of the data makes much sense.
Consider salaries. According to The Economist, Stanford MBAs come out on top of this measure which is composed of actual post-MBA average salary (75% of the weight) and increase in salary over pre-MBA levels (25% of the weight). The Economist estimates that Stanford MBAs make $145,559. Yet, the school’s most recent employment report for last year’s graduating class shows that starting salaries averaged considerably more at $161,831. And as every MBA knows, starting salary isn’t the whole compensation picture. Class of 2021 MBAs at Stanford reported average sign-on bonuses of $29,148 and average expected performance bonuses of $78,373. Adjusted for the percentages of grads getting bonuses, the average total MBA compensation at Stanford grew to $231,849, not including stock awards or other perks.
So not only are the salary figures both incomplete and incorrect, the comparisons with other schools will leave you wondering what is going on. The Economist, for instance, claims that the graduating MBAs from a dozen other schools have better salary stats than Wharton, including the University of Rochester’s Simon Business School and HEC Paris. The employment reports from these schools demonstratively show that is not the case. Wharton’s median MBA salary last year was $155,000, well above The Economist‘s reported average of $142,701. Rochester’s average MBA salary was $123,400 last year, more than $30K less than Wharton’s median.
But it gets much worse. Could anyone believe that Stanford’s MBA program would rank 43rd in opening up new career opportunities for its MBA grads? That rank by The Economist puts Stanford well behind the No. 2 ranked University of Florida, No. 3 EDHEC Business School in France, or No. 13 Warwick Business School in the United Kingdom. It is simply unbelievable.
Or how about the rank assigned by The Economist to the quality of the faculty at Harvard Business School, a metric that is part of the personal development and educational experience category. Does anyone agree that the HBS faculty ranks 88th best among these 100 schools? Not on your life.
And while we’re at it, we should remind every reader what the fine print in The Economist‘s ranking admits: “It should be noted that differences between some schools might be slight. For this reason, individual school profiles now include a banding (A-E), so that schools with similar overall scores are grouped together.” That’s fine and dandy, except that in this overall ranking Harvard, Wharton and Stanford are all deemed in the “B” band. That puts all three world-class business schools in the same band as Hult International Business School. Is there really no meaningful difference between Hult and H/S/W?
So if you try to use this ranking to determine what really separates Harvard, Wharton, and Stanford in this ranking, it’s difficult if not impossible to justify how they rank.
2) Why INSEAD & London Business School Are Not In This Ranking
The most important story in this year's Economist ranking is the return of many business schools that had declined to participate last year as the pandemic continued to linger. And the biggest news this year might well be the list of schools that continued to walk away from The Economist ranking.
If you're looking for INSEAD or London Business School on the list, you won't find them. If you're looking for the prestige MBA programs at both Oxford and Cambridge, they are nowhere to be found. What of IE Business School in Spain or Imperial College London? Nope, not in this ranking.
How come? The methodology employed by The Economist to crank out its ranking consistently undervalues these schools, so much so that they decided not to play ball. This is particularly true when you compare the much higher rankings these schools consistently achieve in the more influential Financial Times ranking which has a greater impact on application volume in Europe (see table below).
Consider this fact: INSEAD has topped the FT ranking three times in that list's history and comfortably sits in third place on the 2022 list. Ditto for London Business School, which has also scored a trio of No. 1 wins on the FT and currently is ranked eighth-best in the world.
When these two schools last participated in The Economist ranking, INSEAD was 22nd, 19 places below its current FT rank, while LBS was 25th, 17 spots under its current FT rank. More telling, however, is how these schools have performed over the long haul in The Economist. Over 18 separate rankings dating back to 2022, neither school has ever ranked first. In fact, INSEAD has only managed to rank in the Top Ten once in 2015 when it was in eighth place; London managed to break into The Economist Top Ten only twice, in 2008 and 2009.
And there have been years when the MBA programs at both these giants of business education couldn't do any better than ranking positions in the 30s: In 2002, The Economist ranked INSEAD 33rd, and in 2004, it ranked London Business School's MBA 31st. Translation: Several other European schools and many U.S. schools have typically outperformed both schools in The Economist ranking which isn't exactly good PR for either school.
Whether or not INSEAD and LBS are out permanently is still to be seen. For now, however, their decision not to participate seems like a sound reputational strategy.