So asks the Economic Logician in his posting What is an MBA worth?
He discusses the results of a paper, The Economic Returns To An MBA by Peter Arcidiacono, Jane Cooley and Andrew Hussey who tackle this question using data from the GMAT, the standard test used to select MBA candidates. What is important about this data set is that it contains students that did not pursue the MBA, as well as what potential students were earning at the time they were taking the test and after studies.
The Logician writes
So what is an MBA worth? A raw regression with few controls gives a return of 9.4% for men and 10.4% for women. Add controls for ability, returns drop to 6.3% and 6.7%. Or use fixed effects, and returns are only 4.8% and 3.8%. These numbers are truly not impressive given cost and supposed prestige of those programs. Which begs the question: are all MBA programs equally valuable?Given that all New Zealand MBA program are outside the 25, by a long way, you do have to ask What is the worth of a New Zealand MBA?
For a school ranked outside the top 25, a full-time or part-time MBA program is essentially useless, in particular after controlling for ability.
But you have have to keep in mind that the results are based on US data and that the average returns may be greater in New Zealand than in the US. But it does make you think. Are our MBA programs worth the time and effort and cost they involve?