Salaries for PhD's

Question

I am going to join a top MBA program from a good insti in India this year. I was haggling between US MBA and an Indian MBA and finally settled for the latter since I have got an admit from the H/S/W of India called IIMs.

I have been thinking about a career in academia though this query is nothing related to that. My query is a bit different.

When we see students applying for an MBA, a 2 year course, so much of calculation is done regarding the fees and the ROI and the average salary and the opportunity cost etc. I have been pretty active in GMATclub and hence know that a hell lot of discussion revolves around these. The institutes also give a lot of information regarding the same in their website in terms of placement reports, profiles etc.

I had done this research for MBA and wanted to do the same for PhD. But the same universities play such a low profile when it comes to PhD websites. I wanted to figure out the kind of money one (which I know is less, but how much less) would make after a PhD and found no mention anywhere. I only got info on which colleges students went to finally.

4 -5 years is a considerable opportunity cost and though PhD is a academic based program with a passion for research and stuff, why do they underplay the salary part so much. One spends 4-5 years (without salary) for getting a PhD and isn't it the responsibility of the university to indicate the kind of lifestyle one would be entitled to post PhD.

What I am missing? Am I the odd one out who thinks like this?

Another doubt:
-> Also, most universities mention PhD fees in the website, but I think everyone gets scholarship and stipend. Hence technically, we get a small cash inflow during PhD and there is no cash outflow. Am I correct on this? (Effectively the opportunity cost of doing a PhD is only the salary lost in 4-5 years and not the PhD fees and living expenses which would be taken care of)

-> How do married people take care of their family expenses during the PhD. Similarly, people who do an MBA bother so much that for 2 years they wont make money and have a huge debt to repay etc, but I don't find such discussions happening around PhD students. Why so?

tkkoh · Answer

Some comments:
1. Look through the posts, and you will find a link that points to a survey of Profs' salaries in B-schools. I think that will address many of your salaries questions.

2. Technically, we don't get a salary during our PhD studies, but many get financial aid in terms of stipends and fellowships. The former basically give you a monthly allowance for living expenses, and the latter usually are in the form of waivers of fees (tuition, admin, etc.). Going by your terminology, my cash inflow (stipends) is my cash outflow (living expenses - rent, food, etc.) Eventually, I may need to touch some of my savings... I guess the opportunity cost differs from person to person.

3. I'm married with a child. Currently relying on the stipends. I do have some savings, but am trying not to touch it during the 1st 2 to 3 years. To give you a sense, most schools put the PhD students (married or not) on a 80% body weight... so if you are married, you may need to cough out a bit more.

4. The journey is long and unpredictable compares to getting an MBA. The financial payoff is not as high too. Hence it doesn't make sense to go on debt for a PhD. The only source of borrowing that I would consider are "friendly loans" - those from close family members and friends. Preferably interest-free.

bauble · Answer

I don't know that the opportunity cost during the 5 years of PhD vs. MBA + years work is that different. Certainly if you land a very high salary job, the MBA is better, but just for the sake of illustration let's say you make 80k after taxes post-MBA (is that low?). You'll pay about 80k for MBA, so that's +160k. A stipend of 25k gives +125k for 5 years.

Of course there is a lot more to the decision than just this simple calculation, but I guess the point is that we shouldn't just take it for granted that the opportunity cost is a huge deal in favor of MBA. Academia is fraught with uncertainty, as tkkoh points out, and very few people go into it for the money -- that's probably why there aren't a huge number of discussions on this topic.

anonymousegmat · Answer

4 -5 years is a considerable opportunity cost and though PhD is a academic based program with a passion for research and stuff, why do they underplay the salary part so much. One spends 4-5 years (without salary) for getting a PhD and isn't it the responsibility of the university to indicate the kind of lifestyle one would be entitled to post PhD.

I don't think it is the university's responsiblity to inform a perspective PhD applicant about potential future lifestyles. I think they expect you bring alot to the table before you'd even apply to their program, so in a way you are already supposed to know what the life of an academic is like before you apply. As far as annual salaries are concerned, whatever professional association publishes your favorite journals should have that info somewhere.

What I am missing? Am I the odd one out who thinks like this?

I think what you are missing is that if you are thinking about getting a PhD because of some monetary payoff you will be in for a pretty big disappointment - I'd venture the biggest disappointment of your life. like bauble said, thats why you don't see it discussed much. You really need to be into the research culture and the constant intellectual challenge it entails, if not you won't cut it.

I was giving a talk to some prospective MBA students at an info session about this very thing... I basically summed it up like this : as an academic your life becomes a constant term paper. This never ends... youre always (hopefully) working on something, and somethings can stretch out for years. Maybe when you get tenure you slow down a bit, but in the ideal case,  you wouldn't want to.

There was a quote I saw somewhere... basically said that as an academic, the little computer inside your head is ALWAYS on. thinking about something, tweaking an experiment, synthesizing things, etc. So this sort of mentality has to excite you. If the thought of extending knowledge doesn't get you off, then there is a problem. More important than the $ you waste over the 5-7+ years, is the time you wasted.

Another doubt:
-> Also, most universities mention PhD fees in the website, but I think everyone gets scholarship and stipend. Hence technically, we get a small cash inflow during PhD and there is no cash outflow. Am I correct on this? (Effectively the opportunity cost of doing a PhD is only the salary lost in 4-5 years and not the PhD fees and living expenses which would be taken care of)

Most stipend packages I've seen place you on a pretty tight budget, I don't know if they technically cover living expenses (maybe if the school is out in a cornfield somewhere). I don't know if the stipends I've seen qualify as poverty line, but I am not 100% convinced that they can cover an average persons living expenses(i.e. someone accustomed to some minimum level of creature comforts) , so I would count on accumulating some debt or writing some grants etc.

-> How do married people take care of their family expenses during the PhD.

Marry into wealth? Put your kids to work? LOL... just kidding. I don't personally know any PhD students who are married, I'd imagine this is very difficult and a source of great strain. Not just from a monetary perspective but from a relationship perspective, since your significant other is going to be ignored an awful lot. Tkkoh is living proof that it is possible, though.

hobbit · Answer

if you think about opportunity cost as a factor in the decision whether to get a PHD or not - Don't (i.e. don't get a phd).

I'm married with a baby. stipend is covering about 50-60% of our expenses. maybe 70% if I take some additional grading/RA/TA duties. the rest comes from savings. hopefully my spouse will get some income from next year - which will make us probably break even.

rpradeephere · Answer

Thanks a lot! Good insights to say the least. And with a certain level of confidence, I can now tell I am not suited for a PhD or mentally prepared for it. At least as of now.

Good I found that out.

Guess finding out that one does not want to do a PhD is as important as finding out that one wants to do it!

Thanks once again.

Salaries for PhD's

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