Monday, 14 January 2013

MBA Price and School Accreditation Have Little Impact on Demand

Here is an article from The Economist that is making the rounds. Rapidly rising tuition fees seem to have little impact on MBA applications.

"A school’s position in The Economist or the Financial Times ranking, however, has little impact on applications. Indeed, where an effect can be seen, it seems that rising in the rankings leads to fewer applicants. The researchers suspect that this may be because weaker students are put off from speculative applications. Another thing that apparently has no effect on applications is whether the school is accredited."

In the US, MBA degrees have grown faster than the population.Between 1971 and 2008, the number of new MBAs increased by a whopping 487.5% while the US population increased by 46.6%.

Can the trend continue?


  1. Just a humble observation that there are a number of interconnected factors happending here.
    (a) For the 'elite' establishment schools, which don't need to be named, AACSB, EQUIS, and AMBA accrediation are meaningless; the value of the MBA degree is in the alumni network available for students. Some schools appear infatuated with delivering on rankings rather than delivering a network for graduate students to pursue better career prospects. Those institutions know their own inherent strengths and weaknesses but a very good at marketing.
    (b) The increasing cost of MBA degrees in particular and a college education in general is argued (persuasively in my opinion) by many of the signs of a bubble in tertiary education. (See ) The increasing cost of a graduate business education coupled with fewer opportunities surely means a lower NPV and ROI for an MBA degree?
    (c) No amount of MBA training or training generally can ably re-educate enough of the populace for a globalized world; technology is making a number of jobs obsolote in high cost countries such as Canada and whether the work will be done in the future by an APP or someone five thousand miles away is irrelevant but unquestionably that work will not be done here. Careers that are 'non tradeable' today may become 'tradeable' tomorrow.
    (d) Those applying for the degrees are rolling the dice; piling on debt in order to build up human captial has been considered a good bet in the past but there will be an inflection point where all but the most privileged will be locked out of the market for a graduate business education and for the rest the demand for it will become more elastic than inelastic.
    (e) Perhaps the demand for executive MBA degrees will increase as those are often sponsored and they provide superior networking opportunities for those attending the second tier institutions.

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