Economy and market for MBAs

Business schools have been widely accused of fashioning the wrecking balls and training many of the demolition crews that have wreaked such havoc in the economy over the past two years. And the crisis, whether it was forged in business schools or not, is undoubtedly making it harder for students to afford their fees, or to get jobs when they graduate: in America only half the class of 2009 had been offered a job three months before graduating. Yet business schools are thriving. More than two-thirds of full-time MBA programmes received more applications this year than last, their best performance for five years, according to the Graduate Management Admission Council, a business-school association.

Deciding whether to go to business school or not is difficult. The long-term benefits sound substantial: an improved chance of getting a corner office and a six-figure salary. But the short-term costs are also weighty: two years at a leading American business school can cost $100,000 even before you take living expenses and forgone income into account. Many of the world’s most famous business people, from Bill Gates down, did not bother with an MBA, whereas some of the most illustrious products of business schools have covered themselves with ignominy of late. Consultancies, which were forced to recruit more people without MBAs in the late 1990s because of competition from high-tech companies, found that they performed no worse and sometimes better.

Still, on balance, the benefits probably outweigh the costs, particularly in straitened times. People with MBAs are more likely to get jobs than people without them, and earn higher salaries. Employers pay MBAs on average twice as much as people with only undergraduate degrees and 30-35% more than people with lower-level management degrees, such as Master of Finance. Some 98% of corporate employers report that they are satisfied with the MBAs they hire, a sign that they will continue to fish from the same pond.