Has the MBA bubble burst or is this merely a minor deflation? There seems to be more in the media about this recently, including the FT, as well as the 'MBA Bubble' book coming out.

www.ft.com/cms/s/2/2313a2f8-7c81-11e3-b514-00144feabdc0.html#axzz2rv10TgdM

http://m.theatlantic.com/business/archive/2013/12/is-an-mba-bubble-popping/282541/

www.thembabubble.com

Is this the usual anti-MBA stuff or the start of a trend?

Hmm....good one...I have just approach the author discussing my personal circumstances. Let's see what does she say!

I'm inclined to view this trend as minor self-correction in the wake of the financial crisis.

Regardless of what the pot-stirrers say, the data say that the ranked MBA programs are still worth the investment. Mind you, grads aren't coming out of these programs with the same bull market fueled salaries as many did in the past, but they still see solid gains. It's simple economics: Until they don't pay off, these top programs will still be worth the investment.

Note that I haven't read that book, since it looks borderline hyperbolic.

I'm inclined to view this trend as minor self-correction in the wake of the financial crisis.

Regardless of what the pot-stirrers say, the data say that the ranked MBA programs are still worth the investment. Mind you, grads aren't coming out of these programs with the same bull market fueled salaries as many did in the past, but they still see solid gains. It's simple economics: Until they don't pay off, these top programs will still be worth the investment.

Note that I haven't read that book, since it looks borderline hyperbolic.

No-one claims that an MBA is mandatory for success. That's not what the discussion is about.

Quite so. Duncan's right.

This subject does seem to have more press than usual. Schumpeter's recent article about business schools in The Economist is worth a look:

www.economist.com/news/business/21595929-business-schools-are-better-analysing-disruptive-innovation-dealing-it-those-who

It's an interesting argument to read.

I think this is interesting... but it's essentially mistaken. The basic argument is that business schools (and the focus is on elite schools) are not acting with the awareness that their market can be disrupted. The market is certainly complex and the macroeconomic changes affect it.

The elite business schools are incumbents. Incumbents have to defend their core markets while expanding into new segments. The core product, the full-time MBA, has been heavily diversified away from: At London Business School, for example, it is a quarter of our revenues.

Income at the top schools continues to rise, and that's mainly because of research and executive programmes rather than increasing the price of full-time programmes. That suggests that there's a strong market segment that finds value in top schools, and the fact that employment levels remain high, salaries are growing and the demand for places from good candidates is strong reinforces that.

Schumpeter makes the misleading point that the number of GMAT tests take dipped last year. That is a dip after a record year last year (http://poetsandquants.com/2012/09/23/gmat-testing-hits-record-volume/) because of people taking the old, easier test, before this years newer and harder test. One data point is not a trend. The supply of applicants to top schools is not falling - as the rising enrolment reflects. What's happening is that we're broadening the portfolio, allowing people to come earlier, into MiM and MiF degrees, or later into executive programmes. Even so, even the full-time MBA cohorts are growing in size at the top schools. LBS, for example, is expanding its teaching facilities by 75% by turning the local town hall into its Sammy Ofer Centre (http://www.ft.com/cms/s/2/cdae22a6-21dc-11e3-9b55-00144feab7de.html).

Schumpeter also points to the rise of for-profit institutions. None of the leading business school seem to be for-profit (IE Business School was founded as an entrepreneurial venture, but I'm sure about it) and such schools tend to either become non-profits (as Hult is now, or they experience the sort of disfunctionality that for-profit schools do in the US: Laureate, for example, is massively in debt).

MOOC's don't erode the market for MBAs. The best providers of business MOOCs are... elite business schools (http://poetsandquants.com/2013/12/17/the-mooc-revolution-the-best-mba-electives-for-free/). These MOOC programmes extend the schools' brand equity, working like free trials of the brand. Wharton's introduction to finance MOOC does not erode the need for the Wharton MBA, and MOOCs expand awareness of elitle schools and make them more valued.

Thanks Duncan, very interesting.

Although not directly related to Schumpeter's argument, I wonder how geography impacts the value of an MBA. An American senior manager recently mentioned to me how poorly the UK values MBAs, compared to his native US.

Well, I think that's partly true and partly untrue. The MBA is more of a niche product in the UK than in the US, and more so on mainland Europe. The MBA is better understood in the US than in the UK. However, the general trend is that top MBA alumni actually get higher salaries in Europe than in the US. LBS, for example, also have the highest employment rate in the FT 100. The European premiums for MBA are slim (I see these data http://www.topmba.com/why-mba/mba-salaries-are-worlds-highest-postgraduate-salaries for example) but while the number of graduates of top full-time MBAs grows only in line with demand, they will continue to get similar rewards, or better, than their US counterparts.