Email from a reader. Reprinted anonymously with his permission.
I have enjoyed your books & EconLog posts (thank you for
all you write!), and have an anecdote that might interest you re: Case Against
I'm an engineer working in industry and currently about
halfway through a top-ranked online MBA program. I went into it aware of (and in
agreement with) your theory that signaling and ability bias explain most of
observed MBA wage premiums, consciously expecting to learn little, but hoping
it would nonetheless help me receive a management-level promotion in the medium
I believe the signal actually paid off before I even started
the degree. I took the GMAT and got admitted to a top school, and roughly
concurrently I requested & received funding approval for the degree from my
employer (I want an MBA, I'm applying to schools, will you pay...). A few
months after this, and a few months before I actually started the degree, a
management position came open and they bent over backwards to give it to me
despite the fact that I didn't have half the years-of-experience requirement
for the job. I think the fact that I had just credibly committed to getting an
MBA was a major factor in this decision. Forward guidance matters.
Now I'm in an odd position: I'm doing an MBA that is not
teaching me much, in significant part to follow through on a signal, even
though I've already received the main benefit from it. (I think fade-out of the
benefit is likely to occur if I remain within my current organization
long-term--perhaps less so if I change jobs.) And my employer is reimbursing
80% of this exercise.
Anyway, it's a funny world, and I think you're explaining it
correctly. You're welcome to use this story--just don't include my name, as my
employer might not be impressed by my cynicism.