A Different Kind of Business School Ranking

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Most business school rankings are fairly simple affairs. Someone gathers the data on average GMAT scores, college GPAs, reputation among peers, and starting salary for grads. Plug all that into a formula, and--ta da!--there's Harvard, Stanford, and Wharton at the top of the list again.

There's no doubt that some of the top business schools are great destinations, that very intelligent, ambitious people go there, and that their faculties are crammed with distinguished professors . However, there's a fundamental flaw in the way these rankings work: They conflate the quality of incoming students with the quality of the education those students receive.

Think of it this way. Someone who goes to a top-ranked business school such as Columbia will probably get great job offers regardless of their choice of MBA program. Sure, a good program could make a difference, but the student herself plays a big factor. So, if Columbia accepts nothing but high-quality students (which is pretty close to the truth), the starting salary of their grads is going to be fairly high no matter how good the MBA program is.

That said, the program surely has something to do with it. Economist Mike Shor took an informal stab at controlling for some of those variables and presents his own business school rankings. Here's an excerpt:

As long as top candidates choose to go to top programs, a higher ranking confounds the quality of students and the quality of a school. The proper interpretation of Business Week's rankings, for example, is not that Harvard is a better school than Blah College, but that the type of students who go to Harvard do better after graduating from Harvard than the type of students who go to Blah College after graduating from Blah. Thus, a high starting salary for Harvard graduates might imply that Harvard's professors can polish rough stone into beautiful rubies, but it is also possible that Harvard has the benefit of students who could have very well succeeded anywhere. (Note: I pick on Harvard because it actually does quite well in my rankings, supporting the rubies theory).

In addition to Harvard, schools in the top five of Shor's rankings are Cornell/Johnson, Indiana-Bloomington/Kelley, Virginia/Darden, and Texas-Austin/McCombs.

If you're interested in economics methodology, be sure to click the link and read the whole thing. A thorough study would go much further than Shor's, but that certainly doesn't mean that the work he's done is without value.

This simple approach eliminates many of the flaws that make traditional rankings so predictable, with the same schools at the top every year, largely because they've been ranked highly in the past.

 

 

About the author: Jeff Sackmann has written many GMAT preparation books, including the popular Total GMAT Math, Total GMAT Verbal, and GMAT 111. He has also created explanations for problems in The Official Guide, as well as 1,800 practice GMAT math questions.

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