I believe that from a purely financial standpoint, an MBA is a better investment than a PhD. An MBA is only a two-year program, whereas a PhD is typically four to six years. The extra time for a PhD probably not yield the extra income needed to make it a good investment of your time. A typical Harvard MBA gets a starting salary a bit over $100K; the typical econ PhD does not start much higher than that.
But the issue is not entirely pecuniary. The question you should be asking yourself is what kind of job you want to have when you conclude your education. A PhD makes sense if you want to consider the possibility of being an academic. You may pursue a PhD and then decide along the way to pursue a different path than being a professor. That is okay: Many PhD students leave for the private sector when they are done with their degrees, and they get very good jobs there. But if you are sure from the beginning that you want some kind of private-sector job, then the MBA is probably the better route.
I have followed a non-traditional path in my education and got my MBA prior to enrolling in a PhD program. Based on my personal experience so far, I would agree with Mankiw. I learned many more applied skills in my MBA program than I have thus far in my PhD program. Both approaches have merits and different objectives, but the MBA is definitely much more directly applicable.
I have often joked that I had to come back to school to study economics because after getting degrees in engineering and an MBA and reaching the height of my earning potential, I decided to quit work and come back to school. Obviously, I didn't understand the concept of opportunity cost. In reality, I couldn't have really followed a different path. I "discovered" economics while preparing to start business school. (I enrolled in a part-time MBA program and my employer covered most of the costs.) Without first getting the MBA, I likely would have never pursued a PhD.
Incidentally, I looked at the Harvard MBA statistics that Mankiw linked to and made this graph. Adjusting for inflation, the median starting salary of a Harvard MBA was worth 10% less in real terms than it was in 2001. (This does not include signing bonus, which has experienced even further decline.) Interesting...
P.S. -- I don't seem to be the only one who's noticed:
See my previous related posts:
1 comment:
You can't say I didn't warn you!
Post a Comment