Bryan Caplan  

Inside the MBA

Henderson on Gary Cohn's Resig... Another Case Against Education...
Email from a reader.  Reprinted anonymously with his permission.

Hi Bryan,

I have enjoyed your books & EconLog posts (thank you for all you write!), and have an anecdote that might interest you re: Case Against Education.

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 term.

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.



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COMMENTS (2 to date)
Matthias Görgens writes:

I've had a similar experience signing up for a part time MSc with Oxford recently. Even just getting admitted opens doors.

(And funny enough, Oxford mostly seemed to admit me based on having Google on my CV. To their credit, Google back then gave me a bunch of proper interviews and didn't care about any degrees or lack thereof.)

Toby writes:

The employer doesn't care about the cynicism. As like long as they can't be linked to it ;-).


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