Saturday, April 22, 2006

What would you do if you won the lottery?

Perhaps it should be, "I'd need to win the lottery in order to do this."

 21st April 2006
Draw #115

For years my previous employer tried to get me to do an MBA. It was in fact a international requirement for promotion beyond a certain level. I protested that I did not feel that I would learn enough after my undergraduate business education and my work experience to justify the cost. I also felt that the experience would cost me in terms of promotion and experience while I was away studying.

Some years later, I walked the campus of Harvard in Cambridge and thought, "Mmm, I could come here - just for the experience."

My opinions on an MBA have not changed, but recently I have considered whether any further post-graduate study would be worth it. These thoughts have intensified as I have taken a 5 month sabbatical and am studying for my third major, economics, which I did not have room for when I originally studied - 10 years ago.

Getting back into studying has been difficult. Especially since I registered for a whole year's worth of subjects to be completed in 4 months. I write exams in a weeks time.

Anyway, the reason I chose to study again is that economics has emerged as my favourite subject and if I chose to study further it would be in this field.

In particular I am interested in combining the fields of strategy, finance and economics to provide greater quantitative guidance to strategic decision-making.

I'd love to study in Boston or New York. If they'd have me, Harvard Business School, NYU Stern, Columbia and MIT Sloan offer PhDs with specialisations close to my interest area.

Harvard Business School's PhD in Business Economics a joint degree offered by HBS and the Department of Economics and allows specialisation in business strategy and industrial organization.

Stern offers a specialisation in strategy economics (probably the best match to my interest area). Stern is known for its practical approach given its proximity to Wall Street.

Columbia Graduate School of Business offers a specialisation in finance and economics. The focus seems to be on quantitative finance though.

MIT Sloan offers a PhD specialising in Financial Economics - again though, it seems to be focused on quantitative finance.

While the courses seem attractive (especially the structure of the Harvard PhD - it includes much of the Harvard MBA), they all require 5 years of full time study. Good grief. Anybody who does the numbers will know that this would have to be for the love of academia rather than any hope of financial reward.

Costs of study include:
  • The course fees

  • The cost of living in Boston or New York

  • The differential of promotion you would have achieved during the study period and the level you might reenter at after study

  • Lost earnings during the study period

  • Lost contributions to retirement savings including their compound interest

Those are in order of ascending cost. Those of you who know how to do a present value calculation, try working out the value of your lost pension contributions and their compound interest (at say a real rate of 2% to 5%) over a thirty year period. It will make your eyes water.

So if I studied, I'd have to win the lottery. Would I study if I won the lottery? Not sure. I'm not the kind of person to lie on the beach for 5 years. I am intellectually curious and money is not my primary motivator, so perhaps.

But for now, the PhD is on ice. I won't benefit from it in terms of a career jump, and it's not holding me back.


See this article from The Observer showing that UK graduates only catch up to non-graduates' earnings at the age of 33. Now imagine taking time off from 30 - 35 - some of the most profitable earning years of your life (typically debts are being paid down and kids are not yet a major expense).


kyknoord said...

I would use the money for therapy. Then I'd use whatever was left to buy a cooldrink.

It is the question said...

Well thanks for that Kyknoord - 30m quid of therapy - is that how much you think I need?!

kyknoord said...

Actually, it was the amount I figured I needed. You? I'll have to think about that.

It is the question said...

Excellent. Please do. I'll compare it to the millions my therapist reckons will do the trick.