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# A new metric for differentiating your b-school choices!

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Senior Manager
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A new metric for differentiating your b-school choices! [#permalink]  02 Aug 2010, 03:22
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Hi everyone,

Plenty of times, we all end up in dilemmas about which schools are our favorite, and in the worst of cases, some egos get a bit bruised as schools get compared.

I'd like to contribute one more metric to the discussion. I APOLOGIZE IN ADVANCE IF PEOPLE HAVE ALREADY DISCUSSED THIS.

Per capita endowment by alumni for FT programs

We regularly see data on earning power for alumni, endowment figures, and alumni loyalty commentary. I think there's one way to capture all of them, albeit imperfectly, but amusingly.

What is the per capita contribution to the endowment from full-time alumni? This will partially negate the difference between size (Harvard, with what, 900 students, vs Tuck with around 200 students per year?), and provides a number figure that captures a) the earnings potential for the alumni as a group and b) the extent to which they attribute those earnings to their alma mater, or simply have positively-inclined emotions towards their school (which to me is a legitimate proxy for alumni loyalty).

So here go! (note, I have taken the total endowments from the latest publicly-available figures, but I have only used the total number of FT MBA alumni, excluding PhD, and when possible, PT. However, this has been difficult to do, so I've noted what data was available for each. Of course this metric has imperfections, as there are plenty of donors who are NOT alumni, and it assumes equal asset management performance on behalf of endowment fund managers).

Rankings according to this metric (which can be improved in terms of methodology and information available, but is a crude and fun proxy nevertheless)

1) Stanford GSB
2) HBS*
3) MIT Sloan**
4) Dartmouth Tuck *
5) Chicago Booth**
6) Kellogg**
7) Columbia**
8) Wharton**
9) Berkeley Haas**
10) NYU Stern**

* Number looks higher because it was possible to isolate full-time MBAs, or other data was available to shorten the alumni list, such as living-only
** Number looks lower because it was harder to isolate full-time MBAs, Berkeley is particularly punished

Harvard and Stanford are ahead of the pack, but MIT Sloan, Dartmouth Tuck and Chicago Booth are in a very strong second cluster, and it's not that far behind the first two. Kellogg is slightly ahead in a significantly smaller cluster that includes Columbia and Wharton (I've heard some noise about Wharton's asset management being extremely conservative, so I don't know how much that impacts the story). Berkeley and NYU complete the Top 10 and are way behind the others, but their data is hurt the most by the myriad of part-time and PhD types that are running around.

Total endowment $2.117 billion Total full-time alumni 56,689 (living alumni circa 41,000, chosen MBA-only, no PhD) End figure:$37,344

Stanford GSB
Total endowment $755 million Total full-time alumni 18,599 (degrees awarded, including deceased, living alumni circa 16,000) End figure:$40,593

Wharton
Total endowment $656 million Total full-time alumni 81,000 (including PhD, MBA-only figures not immediately available) End figure:$8,098

Chicago Booth
Total endowment $800 million Total full-time alumni 39,000 (total alumni, including PT and PhD, could not segment immediately) End figure:$20,512

Total endowment $356,206,536 (based on Business Week 2009 data) Total full-time alumni 38,000 (all degrees) End figure:$9,373.86

Dartmouth Tuck
Total endowment $256.4 million (2007 figure) Total full-time alumni 8,400 (living) End figure:$30,523

Berkeley Haas
Total endowment $159.3 million Total full-time alumni 36,000 (I am assuming these include all degrees, of which there are numerous) End figure:$4,425

MIT Sloan
Total endowment $657 million Total full-time alumni 20,000 (all degrees) End figure:$32,850

Northwestern Kellogg
Total endowment $556 million (June 2009) Total full-time alumni 50,000 (all degrees) End figure:$11,120

NYU Stern
Total endowment $223 million (Summer 2009) Total full-time alumni 80,000 (all degrees) End figure:$2,787.5

Guys, anyone who has better data is welcome to submit. I also probably made lots of mistakes, I'm hungry and want to eat lunch (anyone who knows me knows that I can't think when I'm hungry).
Manager
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Re: A new metric for differentiating your b-school choices! [#permalink]  02 Aug 2010, 05:09
Great analysis! based on that, it looks like the smaller schools have comparable endowment/alumni ratios as the big schools.

One thing I'd like to see, and I don't know how readily available this data is, but what the annual giving rate is for each of these schools - as in, what % of alumni donate to their alma mater every year? That might provide a view of the average earning power of alumni. For example, one generous donor who makes a $300 million donation to Chicago would raise Chicago's profile significantly but would not tell us much about how alumni contribute on average overall. This next thought is totally made up - Lets say the annual giving rate at Harvard is 50% a year (half of all the alumni make some kind of donation to the school each year). However, at Stanford the annual giving rate is 80% - this might indicate stronger affiliation/feelings toward the school. Another example would be looking at the average donation size - lets say H's average donation size is$100 but S's is $200. On average, maybe 1) S's alumni are more loyal to the school and thus want to contribute more, or 2) the alumni have a higher earning power and so are able to contribute more on average. So while most schools regularly publish endowment statistics, I have a really hard time finding out the annual giving rate for schools, which I think is a far less published figure. Thanks for posting! _________________ Director Affiliations: Consortium (CGSM.org), NSHMBA Joined: 25 Aug 2009 Posts: 937 Location: New Haven Schools: Yale SOM Class of 2012 WE 1: Investment Banking Summer Associate (Boutique tech M&A) Followers: 41 Kudos [?]: 224 [0], given: 113 Re: A new metric for differentiating your b-school choices! [#permalink] 02 Aug 2010, 09:05 There are 2 main sites that I'd use to gather the data you're looking for: Endowment: Wikipedia Living MBA Alumni: Businessweek (Alumni affairs and Careers tab from the school profile page; example: http://www.businessweek.com/bschools/ra ... rvard.html, then go to Alumni Affairs & Careers tab) Going through your top 5, I get the following per capita numbers: Stanford Endowment: 755M Living alumni: 16596 Per capita: 45493 HBS Endowment: 2.1B (edit - using 2009 values which are more recent) Living alumni: 43062 Per capita: 48769 MIT Sloan Endowment: 657M Living alumni: 21000 Per capita: 31286 Tuck Endowment: 256.4M Living alumni: 8787 Per capita: 29179 Booth Endowment: 800M Living alumni: 43795 Per capita: 18266 Therefore, with the information I was able to find, I'd switch HBS and Stanford. Also, one notable omission on your list was Yale SOM. From Wiki, its 2009 endowment was 444M, and from Businessweek, they have 5788 living MBA alumni. This yields a per capita of$76710, which would put it at the top of the list.
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Re: A new metric for differentiating your b-school choices! [#permalink]  08 Aug 2010, 13:32
I like this metric a lot. One flaw that will arise here is that relatively new programs will be slower to move up even if they're deserving (and similarly, established schools will be slow to fall). Other than that, I think it's pretty cool.

When you get bored, if you want to calculate through the top 25-30, I'd be curious where everything stacks up.
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Re: A new metric for differentiating your b-school choices! [#permalink]  08 Aug 2010, 13:49
LetsGoMets wrote:
I like this metric a lot. One flaw that will arise here is that relatively new programs will be slower to move up even if they're deserving (and similarly, established schools will be slow to fall). Other than that, I think it's pretty cool.

When you get bored, if you want to calculate through the top 25-30, I'd be curious where everything stacks up.

Hey LetsGoMets, glad to hear from you again!

I find that the flaw you've identified is at its most relevant when it comes to established schools, because they might live a bit too long off the toils of their predecessors/past successes. However, I think it's a valid measure for the newer, up-and-coming schools: because it is a per-capita measure rather than an absolute endowment measure, it will capture an early breakthrough for a young program, and which can propel the young school up the "rankings" (a new $10 million donation for a young program with a small alumni base will do a lot more - in absolute and per capita terms - than$10 million at HBS would).

Rather than measure the success of the alumni pool and the love felt by the alumni for the alma mater (which it sort of does), by including donations from wealthy individuals or from corporations, it is also factoring in a "general popularity from a capitalist point of view" issue.

Now I have to go to sleep. My week has not begun well... when it starts to look better, I'll dig out the data for the top 30 schools. Feel free to help me out, you're on vacation!
Senior Manager
Joined: 04 Dec 2009
Posts: 376
WE: Consulting (Consulting)
Followers: 11

Kudos [?]: 74 [0], given: 4

Re: A new metric for differentiating your b-school choices! [#permalink]  08 Aug 2010, 13:51
There are 2 main sites that I'd use to gather the data you're looking for:
Endowment: Wikipedia
Living MBA Alumni: Businessweek (Alumni affairs and Careers tab from the school profile page; example: http://www.businessweek.com/bschools/ra ... rvard.html, then go to Alumni Affairs & Careers tab)

Going through your top 5, I get the following per capita numbers:

Stanford
Endowment: 755M
Living alumni: 16596
Per capita: 45493

HBS
Endowment: 2.1B (edit - using 2009 values which are more recent)
Living alumni: 43062
Per capita: 48769

MIT Sloan
Endowment: 657M
Living alumni: 21000
Per capita: 31286

Tuck
Endowment: 256.4M
Living alumni: 8787
Per capita: 29179

Booth
Endowment: 800M
Living alumni: 43795
Per capita: 18266

Therefore, with the information I was able to find, I'd switch HBS and Stanford. Also, one notable omission on your list was Yale SOM. From Wiki, its 2009 endowment was 444M, and from Businessweek, they have 5788 living MBA alumni. This yields a per capita of $76710, which would put it at the top of the list. Shadowsjsc, thanks for this info. I think that the numbers depict Yale SOM quite favorably I used a blend of sources; Wikipedia and BWeek were not satisfactory for every school. Schools themselves disclose a lot of this, but the information isn't always centralized. Current Student Joined: 10 Nov 2009 Posts: 248 Schools: Emory 2012 WE 1: 1 yr proprietary trading WE 2: 2 yrs global ibank in municipal derivatives Followers: 6 Kudos [?]: 49 [0], given: 11 Re: A new metric for differentiating your b-school choices! [#permalink] 08 Aug 2010, 13:57 osbornecox wrote: LetsGoMets wrote: I like this metric a lot. One flaw that will arise here is that relatively new programs will be slower to move up even if they're deserving (and similarly, established schools will be slow to fall). Other than that, I think it's pretty cool. When you get bored, if you want to calculate through the top 25-30, I'd be curious where everything stacks up. Hey LetsGoMets, glad to hear from you again! I find that the flaw you've identified is at its most relevant when it comes to established schools, because they might live a bit too long off the toils of their predecessors/past successes. However, I think it's a valid measure for the newer, up-and-coming schools: because it is a per-capita measure rather than an absolute endowment measure, it will capture an early breakthrough for a young program, and which can propel the young school up the "rankings" (a new$10 million donation for a young program with a small alumni base will do a lot more - in absolute and per capita terms - than $10 million at HBS would). Rather than measure the success of the alumni pool and the love felt by the alumni for the alma mater (which it sort of does), by including donations from wealthy individuals or from corporations, it is also factoring in a "general popularity from a capitalist point of view" issue. Now I have to go to sleep. My week has not begun well... when it starts to look better, I'll dig out the data for the top 30 schools. Feel free to help me out, you're on vacation! My classes start tomorrow. I already have homework. Vacation is officially over. _________________ VP Joined: 11 Dec 2006 Posts: 1429 Location: New York, NY Schools: NYU Stern 2009 Followers: 41 Kudos [?]: 219 [0], given: 6 Re: A new metric for differentiating your b-school choices! [#permalink] 08 Aug 2010, 14:27 This measure gets skewed in some odd ways though. There are a lot of Booth alumni who get a free ride on donations through Mr Booth and his$300m or so. Then there are people like Paulson at NYU who gave money to development projects and professor seats only. I like the idea, though. Including that I currently feel the $85k in fees I gave to my school was adequate donating. _________________ VP Joined: 09 Dec 2008 Posts: 1221 Schools: Kellogg Class of 2011 Followers: 21 Kudos [?]: 242 [0], given: 17 Re: A new metric for differentiating your b-school choices! [#permalink] 08 Aug 2010, 16:12 One other factor that will skew this is investment returns on the endowments. If School A and School B both start the year with$1000 in endowment and 1000 alumni, they have the same per capita endowment. If School A earns a 10% return while School B earns 5%, now School A looks better although its alumni may not be any more engaged or enthusiastic. An improvement would be to look at avg annual donation per alumni - this would also make the case of the good Mr. Booth a one-off event rather than something that would skew the metric year after year. However, I don't know if schools make public their donations reports like charities do...
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Re: A new metric for differentiating your b-school choices! [#permalink]  08 Aug 2010, 21:02
Hi Jerz, you're right, which is why I included the caveat of "Of course this metric has imperfections, as there are plenty of donors who are NOT alumni, and it assumes equal asset management performance on behalf of endowment fund managers)."
To be honest, I'm not sure how we can get around that. In an ideal world, the endowment managers would all be alumni, and then we could establish a like for like comparison in their asset management skills
Senior Manager
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Re: A new metric for differentiating your b-school choices! [#permalink]  10 Aug 2010, 09:11
3underscore wrote:
This measure gets skewed in some odd ways though. There are a lot of Booth alumni who get a free ride on donations through Mr Booth and his $300m or so. Then there are people like Paulson at NYU who gave money to development projects and professor seats only. I like the idea, though. Including that I currently feel the$85k in fees I gave to my school was adequate donating.

They're waiting for you to set up Manchester's best hedge fund
Re: A new metric for differentiating your b-school choices!   [#permalink] 10 Aug 2010, 09:11
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