The latest ranking of MBAs by The Economist is accompanied by a simple summary of the impact on income, tuition fees and completion time for the top twenty.
It raises the simple question of "is the MBA worth it". For the analysis below I've made the following assumptions.
* The starting salary (salary at graduation less the percentage increase) would have been salary in perpetuity without study.
* The starting salary is income foregone for the duration of study (note this could be adjusted to add a variable number of months to gain post-study employment)
* The post graduation salary is salary in perpetuity after graduation.
* Total investment is salary foregone plus tuition fees (it might also need to include travel fees and a marginally increased accommodation cost).
* The benefit of the study is the salary increase.
* The total costs are incurred at the end of the study period.
* The discount rate is a bank rate (in Australia) that the individual could have earned on their investment, not what it would cost to borrow it.
The table below then lists the breakeven period in years from studying the MBA;
School Breakeven (Years)
MIT Sloan 6.221474851
New York 4.934890324
HEC Paris 1.801230378
Penn Wharton 6.147176899
Carnegie Mell. 5.233258692
NW Kellog 6.443697885
(analysis available here)
This doesn't take into account other "opportunity costs" (or benefits) of locking yourself away (or networking). But I think I know why I never bothered.
Novae Meridianae Demetae Dexter delenda est