Authors libby rittenberg 708

the life of the asset One’s education produces—or it can be expected to produce—additional income over one’s working career Ronald Yeaple, a professor at the University of Rochester business school, has estimated the net present value (NPV) of an MBA obtained from each of 20 top business schools The costs of attending each school included tuition and forgone income To estimate the marginal revenue product of a degree, Mr Yeaple started with survey data showing what graduates of each school were earning five years after obtaining their MBAs He then estimated what students with the ability to attend those schools would have been earning without an MBA The estimated marginal revenue product for each year is the difference between the salaries students earned with a degree versus what they would have earned without it The NPV is then computed using Equation 13.5 The estimates given here show the NPV of an MBA over the first seven years of work after receiving the degree They suggest that an MBA from 15 of the schools ranked is a good investment—but that a degree at the other schools might not be Mr Yeaple says that extending income projections beyond seven years would not significantly affect the analysis, because present values of projected income differentials with and without an MBA become very small While the Yeaple study is somewhat dated, a 2002 study by Stanford University Graduate School of Business professor Jeffrey Pfeffer and Stanford Ph.D candidate Christina T Fong reviewed 40 years of research on this topic and reached the conclusion that, “For the most part, there is scant evidence that the MBA credential, particularly from non-elite Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 708