International Students versus US Students

[zra200]

From looking at profiles of current PhD candidates in finance, regardless of what tier the school is in, it looks like a large percentage of students are international students. Is this a bias in the adcom decision process to promote diversity or do fewer US students tend to apply to PhD programs in business/finance?

[Prawler]

I think US citizens don't like going for PhD. They already make big bucks in the Industry, or they don't have ambition, passion, aspiration and devotion required for a PhD. I don't agree with the opinion that adcom acts completely on International behalf, but they are also interested in promoting the diversity.

[Hocking]

It all comes down to opportunity costs. The opportunity cost for an American citizen to spend four to five years in a PhD program that will not increase their earning potential significantly is too high. Foreign students do not have that high of an opportunity cost because many of them can't find a job in industry making decent money from the countries that they come from. It is nothing to see 90-95% of an economics PhD program made up of international students simply because you can expect to earn about $70,000-85,000 per year with an economics PhD. In America, you can earn more than that spending one year in an MBA program. It just isn't worth it financially for many Americans to spend that much time and effort getting something that does not pay off for them.

In Finance, Accounting, and some of the other business fields you will actually see more American's getting their PhD's. Why? Look at the $135,000-$150,000 salary ranges in those fields. The opportunity costs of getting your PhD is quite a bit less if you can earn that much money after earning your PhD. These salary figures start to exceed what you can earn with an MBA, so more American's are interested in completing PhD's in these fields.

[Prawler]

Originally Posted by Hocking

It all comes down to opportunity costs. The opportunity cost for an American citizen to spend four to five years in a PhD program that will not increase their earning potential significantly is too high. Foreign students do not have that high of an opportunity cost because many of them can't find a job in industry making decent money from the countries that they come from. It is nothing to see 90-95% of an economics PhD program made up of international students simply because you can expect to earn about $70,000-85,000 per year with an economics PhD. In America, you can earn more than that spending one year in an MBA program. It just isn't worth it financially for many Americans to spend that much time and effort getting something that does not pay off for them.

In Finance, Accounting, and some of the other business fields you will actually see more American's getting their PhD's. Why? Look at the $135,000-$150,000 salary ranges in those fields. The opportunity costs of getting your PhD is quite a bit less if you can earn that much money after earning your PhD. These salary figures start to exceed what you can earn with an MBA, so more American's are interested in completing PhD's in these fields.

So international students starting a PhD in a business school are more luckier, huh?

[Hocking]

I don't know what you are asking me Prawler. In the end, the selection committee could really care less about where you come from. They are going to select the people who have the best backgrounds, and the best chance of completing their program. I don't think schools are concerned as much about diversity as they are about getting smart people into their programs at the PhD level.

My comments pertain to my opinion about why most Americans are not interested in competing a PhD. They do not want to spend 4-5 years going through school when it will not increase their earning potential when they are finished. So, the opportunity cost of getting your PhD is too high for an American. People from other countries do not face those kinds of opportunity costs because they don't have the opportunity of getting a high paying job with a masters or undergraduate degree like we do here in America. Those people are more willing to go through 4-5 years of additional schooling, and then get the opportunity to stay in America when they are done and get a good paying job when compared to what they could have earned without a PhD in their own countries.

Their are definitely international students in Finance PhD Programs, but you will also find quite a bit more American students in these programs as well. When you look at Economic PhD Programs, you will find very few Americans even applying to those programs. That is why you have so many international students in Economics Programs.

[oldprogrammer]

I think Hocking nails it. It's purely an issue of opportunity cost, and has little to do with Americans be lazy or adcoms trying to foster diversity. At the PhD level it is purely about how well the applicant will be able to contribute to the department.

[shashwatalok]

Well I feel it is incorrect to suggest that International students go for a PhD because of the opportunity cost being less. There is no point in spending 4-5 years in doing an Economics PhD for $70000-$85000 because u can earn similar salaries with a MS degree. Infact most of my friends who have done MS are earning upward of 85k. $70-$85k salary in USA is not as much if u take in to account the Purchasing Power Parity and Income after tax certainly not worth spending 4-5 years of ur life for. However, like you said in fields like finance and accounting the opportunity cost could be playing a larger role because of the figures involved.

[desimba]

Originally Posted by shashwatalok

Well I feel it is incorrect to suggest that International students go for a PhD because of the opportunity cost being less. There is no point in spending 4-5 years in doing an Economics PhD for $70000-$85000 because u can earn similar salaries with a MS degree. Infact most of my friends who have done MS are earning upward of 85k. $70-$85k salary in USA is not as much if u take in to account the Purchasing Power Parity and Income after tax certainly not worth spending 4-5 years of ur life for. However, like you said in fields like finance and accounting the opportunity cost could be playing a larger role because of the figures involved.

Your comparison isn't entirely correct because it is difficult for international students to get a fully funded offer to a Masters' only program. For them the choices could be either to pay tuition and living expenses out of their own pocket for the 2 years of a Masters or enroll into a fully funded PhD program. Hence several of these choose to take up the latter option. In that case, the relevant opportunity cost for them is not the money they could earn after a Masters' but the money they could earn in their native countries (say India or China- the source for most international students) over the course of those 5 years (and beyond). Thus when they make the comparison, they decide that even if a PhD is not what they would have ideally liked to pursue, enrolling in a PhD is the only feasible option for them to come to the States and they are ready to grin and bear through those 5 years.

[Denver-Broncos]

I’ve always felt that the Americans are generally less interested in competing with each other academically than people from other cultures. For instance, at a cocktail party in the US a professor will be considered “more successful” than a plumber, but the professor will likely be considered “less successful” than the owner of a plumbing company.

By contrast, in many other countries education is considered more of a covetable achievement. This can be seen in the way people write “BSc (Hons)” or something like that after their name on business cards outside the US. Americans almost never place the achievement of a bachelor’s degree credential next to their name on business cards. Further, many Americans don’t even mention the achievement of an MSc or MBA on their business cards (myself included). If American culture considered one’s acceptance into the academy as opulent an accomplishment as becoming a multi-millionaire, I would think many more Americans would pursue terminal (doctoral) degrees.

As a number of people have mention here, social status in the US is based more on an individual’s ability to capture money and power; the former of which professors generally don’t have. Even if academics earn a decent income, for many college-educated, highly capable Americans the inevitable stigma of having an earnings-cap placed over your head simply isn’t part of the equation to living for the American dream.

[Prawler]

Those people are more willing to go through 4-5 years of additional schooling, and then get the opportunity to stay in America when they are done and get a good paying job when compared to what they could have earned without a PhD in their own countries.

I think that's exactly the point.