Working Paper: NBER ID: w4609
Authors: Joseph Tracy; Joel Waldfogel
Abstract: We present a new methodology for ranking business schools. Unlike previous rankings based on subjective survey responses (from CEOs, business school deans, recruiters, or graduates), our approach uses data derived from the labor market for new MBAs. We adjust programs' salaries for the quality of entering students in an attempt to distinguish value added from the quality of incoming students. We then rank programs according to value added. Our results are rather surprising. While four of our top five programs are also labelled as top programs in other rankings, ten of our top twenty are previously unranked. By emphasizing program value added, our procedure identifies several programs that have been overlooked by other rankings since they do not recruit the very top students. We explore the determinants of our value added and student quality measures and find that connections to the business community are positively related to value added, while academic research and high faculty salaries are more strongly associated with student quality. We also find that tuition is better explained by our measure of value added than raw salary, suggesting that programs charge according to value added.
Keywords: business schools; MBA; rankings; labor market
JEL Codes: I23; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Academic research output (A14) | Quality of incoming students (D29) |
| Faculty salaries (J39) | Quality of incoming students (D29) |
| Quality of incoming students (D29) | Starting salaries of graduates (A23) |
| Value added by MBA programs (M59) | Starting salaries of graduates (A23) |
| Connections to the business community (M29) | Value added by MBA programs (M59) |