| Topic Name: |
Who is hiring? |
| Message Name: |
roi continued |
| Date Posted: |
05/09/2003 |
| In Reply To: |
So the value of an MBA is the exposure to new ideas, to new people, an elite social culture, and to different industries?
You know, there is another place you can get all of these things [except maybe the "elite social culture"]... by looking for an interesting new job! The best part is, your new employer might even pay you...
Seriously though, we're talking about a $150-200K investment when we factor in lost net income for two years. Pretty expensive for a "soft benefit", don't you think?
I don't mean to say that getting an MBA is a bad thing, or that ROI should be the ONLY measure used to decide whether [and where] to go. I personally believe that ROI depends on the individual situation and that there are people for which it has great economic benefit and there are people for which the economic return is neutral, negative, or worse, "soft."
It is not futile to measure ROI; the net wealth creation [salaries, equity, etc. less investment and opportunity cost] is quantifiable. The tricky part is in finding equal demographic groups to survey competently making an equitable comparison. This is not to say that "exposure to new people" doesn't have value... but it doesn't have ECONOMIC value unless there is a quantifiable increase in wealth creation as a result.
There are many valid reasons to go to b-school; one of them is economic. Others [increased job security, etc.] are also important. However, if the economic reason isn't clear cut in all cases, don't you think that is an important finding?
Sincerely,
ROI Moron |
| Message: |
I think ROI is a valid piece of the analysis, but the problem i have is that its often weighed too heavily,
i.e. if you have to choose between in state at berkeley versus out of state at Wharton, ROI can tilt the equation to berkeley.
also, i think the opportunity cost is over estimated by a lot of these calculations. I think there is a non-monetary value to taking two years off work. I think rather than looking at the lost Revenue (i.e. income) over the two years, it would be more accurate to look at the lost Net Income (i.e. Savings) over two years. That number will bring the opportunity cost down considerably. Because your spending will go down during business school but your return on the money you do spend will likely go up. In fact one can argue that the ability to take two years off while improving your resume is well worth the opportunity cost and then some.
Finally, concerning the ??soft?? knowledge gained by looking for an interesting new job versus the knowledge gained with the resources available to b-school, its no comparison. That is a specious argument at best, at worst it??s a foolish statement.
My only point is to realize ROI is just a tool, and it should not be over relied upon. That many of the potential upside is very difficult if not impossible to quantify. So much of business is luck and so much of luck can be created. If you want to start a fishing firm, don??t move to Iowa and so on. Surrounding yourself with 300 to 1200 highly energetic, ambitious intelligent people for two years is the best way to place yourself in fortune??s way. Its like fishing in a fishery. That value is hard to quantify yet considerable.
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