Phd Opportunity cost VS mba

[toiysam]

I don't understand much why everyone says that a phd costs too much.

ok, let's say that you are to decide whether to work then getting an mba, or going straight out of college into grad school , to pursue a phd.

if you decide getting into the labour market, then you work for two years(min) with a salary of lets say 60 k (overestimated), then you get into an mba programme and pay 50k per year(will not use opportunity cost since i want to compare it with the phd compensation), so at the end, you are 2*60-2*50= 20k after finishing your mba.

if you opt for the phd with funding, you will get (let's say 4 years) 15k per year, that is 60k after finishing your phd(actuallu since you get more money in the first two year before the mba you will pay more taxes than while at the phd, but i will not consider that)

so, to make things simplier, let's say that afte rhte phd you will be financially compenstated exactly the same as after the mba. now, cant a person with a phd make the same amount as an mba after they both graduate if we consider that the phd person wants to work in corporates. is a phd in econ a disadvantage?are smarter people in disadvantage for not having a lower quality degree? you know , they say that you can actually get all the knowledge of an mba education in 6 months, and if you already have a business education at undergrad, you wont get much education at all?

any comments??

[Starvingecon]

First of all a PhD typically takes between 5 an 6 years on average to complete. And startig salaries in the private sector tend to be around 90k(from an AEA paper). While starting MBA salary from us news tends to be 115k. I'm assuming someone who can get into a top 25 phD program can get into a top 10 MBA program. So it is a loss typically financially. So if you want to do the same type of work as somebody with an MBA, it makes sense to get an MBA and not a PhD.

[toiysam]

and why do you think that a guy with a phd cant make as much money as a fresh mba?
cant a phd get teh same job as an mba at IBank? what does an mba guy has that a phd doesnt?
and if you assume that the cost of the fifth year as costs that you are willing to take just for the hell of the phd title? wouldnt it be the same to get an mba and a phd.
i just cant understand why a phd in econ cant make as much money as an mba?! i guess an mba can analyse a case/situation BETTER than a guy with heavy research experience.
is it the brains or what?!!!
why would mckinsey prefere a guy with an mba than a guy with a phd??

edit
and the 90 vs 115, are you comparing the average phd private sector with top mba programe??

[Starvingecon]

Maybe Mckinsey doesn't prefer a guy with an MBA but most people with PhD's would rather take jobs that pay less to do work that really utilizes the degree that they have.

[user_name]

Starting salaries for economists working in the private sector in 2002 according to Siegfried and Stock (2002):
Median: 94,500
Mean: 97,000
Low: 57,000
High: 300,000

I guess it's lower than an MBA's salary because an MBA usually has some work experience before going to business school. Some econ PhD's go to grad school right after college, others have work experience as research assistants which may not be particularly relevant for working in the private sector.

PS: I just found out that the salaries for economists reported are base salaries, while US News apparently reports salaries and bonuses.

[bscout]

Originally Posted by user_name

I guess it's lower than an MBA's salary because an MBA usually has some work experience before going to business school.

Exactly. The useful data here would be the salary before enter in a graduate programfor both options. To see the value of that program (measure in money), we have to observe the marginal increase of the salary and not just compare the level of it.

[floplo]

one way to explain the difference:

if you have an MBA from a top US school you become the US President
if you have an Econ phd from a top US school you become the Mexican president,

that might explain the official salary differences.... ;-)

[maths_bonn]

Maybe a PhD can do the same work as an MBA student (I think that this is true in the most cases), but the question is : does he want to do the work. I think that I-Banks do like employing MBA Students because they have learned to do a lot of numbercrunching and material gathering for lots of case studies, whereas a PhD student maybe has had the specific idea for a theoretical case, and filled it with live. I just want to say that it could be harder to motivate a PhD student to do Excel-Spreadsheets.
I think that this would be the case and not the level of education. (In fact the level of ed.plays the role because a PhD is longer then an MBA, but I don't think that they would take a genius who got his PhD in two years for numercrunching, he would just be bored and doesn't bring good results because of the lack of motivation)
Just my