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Who’s Benefiting from Business School Research?

Lawrence A. Crosby

In a system that rewards researchers whose findings are published, but not necessarily practiced, who is served by ballooning tuition and studies of theory?​

The economic value of a college degree is widely recognized. Burleson Consulting estimates the net present value (NPV) of a bachelor’s degree in business administration, versus graduating from high school, to be $350,000. The NPV of an MBA is estimated to be $800,000. While those figures presumably account for the lost wages while attending school, the income gains are offset by the total costs of the advanced education. A bachelor’s degree from a state university costs approximately $100,000, according to The College Board, compared to the more than $200,000 tuition incurred by students at some private universities. The Financial Times estimates the average total cost of an MBA to be between $160,000 and $220,000. 

While the math suggests that both undergraduate and master’s degrees show a positive ROI, the educational investment is largely up front, which often leads to large student loans that students may not pay off until middle age. And it’s only going to get worse with tuition and fees rising at a rate of about 3% per year while financial aid has failed to keep up.

With declining government support, business schools are increasingly dependent on tuition and fees for income. Their largest expense is faculty salaries. According to the Association to Advance Collegiate Schools of Business, the starting salary for a “doctorally qualified” business school faculty member often exceeds $100,000 but can reach $150,000 to $175,000 depending on the school and field (accounting and finance being the highest, with marketing in the middle). Research-oriented universities tend to pay more and require less teaching; that’s not to say faculty there have it easy, but what are they working on during nonteaching hours?

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Lawrence A. Crosby is the retired dean of the Drucker School of Management. He is the chief data scientist at the KH Moon Center for a Functioning Society, a part of the Drucker Institute at Claremont Graduate University.