<p>
[quote]
Use another example like a PhD in environmental toxicology or anthropolgy. Let's see how you guys can wing that into investment banking.
[/quote]
</p>
<p>Very funny you should mention that, because I know of a girl who got her PhD in anthropology and is now working in management consulting. OK, it's not an investment banking story, but still. </p>
<p>Of course, her PhD came from, you guessed it, Harvard.</p>
<p>Sounds like she wasted her time. Should have done a MBA at Harvard instead in 1/4th the time.</p>
<p>Actually, it depends on what type of consulting. If it is antropology related, that's fine, which brings us to the fact that she's doing what she specialized in. Maybe later she'll move to management. But by then, her professional credentials will be vastly more important.</p>
<p>
[quote]
Sounds like she wasted her time. Should have done a MBA at Harvard instead in 1/4th the time.
[/quote]
</p>
<p>Oh, I don't know. Let me put it to you this way. She never had any prior work experience. To even get admitted to HBS generally requires several years of work experience (as less than 1% of an HBS class has zero work experience). She was able to skip that requirement.</p>
<p>Furthermore, you have to pay to go to HBS. It ain't cheap. She, on the other hand, got paid to get her PhD. </p>
<p>So let's work out the math. Let's say that you graduate from college and get a good job for 2 years, paying $60k a year. I think that's highly optimistic for somebody with an anthro bachelor's, but let's just say that it's true. Then, assuming you go to HBS for 2 years, you pay about 50k a year in tuition and other fees. So, after all that, you're a net positive 20k.</p>
<p>Cost</a> Summary - Harvard Business School MBA Program</p>
<p>On the other hand, you go to Harvard for an anthro PhD right out of undergrad. You don't pay any tuition, and indeed, you actually get paid a stipend of around 23k or so. So at the end of 4 years, you're a net positive $92k. If you both end up with the same McKinsey associate level job, it is quite clear who came out ahead. In fact, her strategy turned out to be a brilliant way to get into consulting. Why pay to get a degree from Harvard if you can get paid to get a degree from Harvard, especially when, career-wise, you both end up at the same place anyway? </p>
<p>Now, to be fair, of course it is true that her chances of getting that consulting job are lower than the chances of a guy coming out of HBS. And of course it is also true that you may not even finish the PhD at all (although you can almost certainly get a consolation master's). Nevertheless, the point stands that she came out of the process smelling like a rose. In fact, everybody who gets a PhD and then gets an MBA-type job can be characterized this way. You don't need to get work experience necessary to get into an MBA program, and you get paid to get your degree. It's higher risk, but also higher reward, because you never have to go into the debt that the MBA students do. </p>
<p>
[quote]
Actually, it depends on what type of consulting. If it is antropology related, that's fine,
[/quote]
</p>
<p>It's not. Want to know what her projects have been? The energy industry, especially alternative energy. It's not clear to me that that has anything to do with anthropology. </p>
<p>But that's not the point, for the fact is, plenty of people end up in careers that have nothing to do with their degrees. That's been what I have been emphasizing all along. You never know what you are going to end up doing in your career. There is a high chance that one day that you are going to end up in a non-research job.</p>
<p>It doesn't even have to be a switch like moving into consulting right out of grad school. I think the simplest example is that of people who get PhD's in technical subjects (science, engineering) and work in industrial research jobs, but then later decide that they want to transition to management. Once you make that transition, then you're no longer a researcher, and hence your research credentials don't really matter any more.</p>
<p>To be clear, I am not advocating that everybody should always choose a brand-name PhD program every time. However, I am saying that choosing brand names can be rational for some people, given the uncertainty of the future. Nobody knows what sorts of job they are actually going to have in the future. Not everybody gets a research job, heck, not everybody even wants a research job. And of those that do want one and do get it, not everybody wants to keep it for the rest of their lives.</p>
<p>You got a very interesting point Sakky. Have you ever heard of anyone entering into management consulting with a bio PhD from Stanford and a bachelors from Yale? I want to know just in case if I want to switch fields in a few years.</p>
<p>bo435,</p>
<p>Sakky only know anecdotal stories from MIT and Harvard, where he hangs out for grad school. He has not done any sort of comprehensive study of "career switching".</p>
<p>Saying that, I do know of one person who went from a Harvard PhD to Mercer consulting. He was hired for his specialist biotech knowledge, though, and spent a lot of time phoning physicians getting their insight. He found the work rather unexciting and left after a year (and finishing that year was a struggle.)</p>
<p>I didn't say consulting for PhD was difficult to obtain. I said consulting for a PhD right out of grad school in an area unrelated to your research is difficult to attain. For example, it is easy for engineeing/math/physics PhDs to move into financial careers due to high correlation with the mathematical knowledge required on the job to their own research. But I find it odd (though not impossible) that someone in anthropology or environmental toxicology can find a job in absolutely unrelated field with no real directly transferable skillsets and knowledge. </p>
<p>I don't hear stories like these at my school on the west coast. Usually, people who got PhDs in a particular field (e.g. entomology or something), continue along a similar path as a part of their career (at least the short term). For me I would probably question the quality of a financial firm when I figure out that one of the consultants in technical management department has a doctorate in art history or something...</p>
<p>Why would you want to waste 4-6 years of your life and the opportunity cost to gain work experience in a field where you could basically jump in after a few years of undergrad + MBA? Don't get me started on PhD stipends.</p>
<p>
[quote]
Sakky only know anecdotal stories from MIT and Harvard, where he hangs out for grad school.
[/quote]
</p>
<p>Naturally, that is where I have the most data.</p>
<p>But I would hardly find it surprising to find that the same thing happens at other top schools. For example, the Harvard anthro girl I talked about has 2 other people on her McKinsey team with PhD's, both from Princeton. Or take Stanford. My brother went to Stanford for grad school, and he knows quite a few people who got technical Phd's and then ended up in unrelated jobs, like consulting or banking. </p>
<p>Heck, consider this guy, who McKinsey is touting as a 'model' employee.</p>
<p>McKinsey-Consultant</a> Profiles</p>
<p>
[quote]
He has not done any sort of comprehensive study of "career switching".
[/quote]
</p>
<p>Uh, have you? I didn't think so. </p>
<p>
[quote]
But I find it odd (though not impossible) that someone in anthropology or environmental toxicology can find a job in absolutely unrelated field with no real directly transferable skillsets and knowledge.
[/quote]
</p>
<p>Well, hey, what can I say? I am not the one who is doing the hiring. Take it up with the consulting firms. Yet you can view the MIT career data yourself and note that there are indeed people earning PhD's who then take consulting jobs. </p>
<p>Besides, maybe this quote will explain it:</p>
<p>*More Ph.D.'s from top programs are finding jobs -- and six-figure salaries -- in the burgeoning field of management consulting. Business backgrounds aren't a prerequisite, although the consulting companies are looking for people with a head for numbers and a knack for problem-solving.</p>
<p>While the academic job market has been in a slump in recent years, the consulting industry has been booming for the last decade. The number of M.B.A. graduates has not kept pace with the demand for smart people in the business world, according to several career experts. So, fortunately for academics, management-consulting firms are increasingly looking to Ph.D.'s as a potential source of new hires.</p>
<p>"We don't care what discipline Ph.D.'s were in because we're hiring them for the raw horsepower," says Ann Sacra, a manager at Dean & Company who's also in charge of Ph.D. recruiting. Her company hired 18 new employees last year; a third of them have Ph.D.'s. "We're looking for talented people who can do creative problem-solving and have strong analytical skills, but we realize that most Ph.D.'s don't have any business experience and we don't expect them to.</p>
<p>Management consultants work with senior-level managers of companies to solve problems such as how to make a company more competitive, how to best market a product, and how to streamline corporate operations. Consulting companies seek ambitious and well-spoken people with excellent problem-solving skills and the abilities to lead others and to work well in a team.</p>
<p>Consulting firms are more than willing to teach Ph.D.'s about business fundamentals. At McKinsey & Company, for example, new Ph.D. hires take a three-week mini-M.B.A. course before they go to work in teams with more-experienced consultants. Most of the major management-consulting firms have similar training programs for Ph.D.'s.</p>
<p>"We're not going to bring them in and pay them a lot of money just to leave them to twist slowly in the wind," says Alan Kantrow, chief knowledge officer at the Monitor Company. "We're making an investment." Mr. Kantrow, who's been with the firm for five years, received a Ph.D. in the history of American civilization from Harvard University in 1979.</p>
<p>After their initial training, Ph.D.'s are treated just like everyone else, notes Martin Tanner, who joined McKinsey in January 1998 after getting a doctorate in electrical engineering from the University of California at Los Angeles. "The mini-M.B.A. is the last place where we distinguish between Ph.D.'s and M.B.A.'s," he says. "Ph.D.'s do the same assignments as M.B.A.'s do; they get the same salary; they're promoted at the same rate."</p>
<p>While business isn't a prerequisite, a comfort with numbers is. Ms. Sacra joined Dean & Company in 1996 after getting a Ph.D. in chemistry from the Massachusetts Institute of Technology (she was the first Ph.D. hired by her firm). It's her job to look at strategic issues that affect the bottom line of her clients, which are mainly Fortune 500 companies.</p>
<p>For example, she's currently working with a team of consultants on a plan to increase the efficiency of a telecommunications company's operations. While her expertise in chemistry has little to do with her job in consulting, the research and data-analysis skills that she learned in graduate school are integral to her work, she says. Although management-consulting firms don't seek Ph.D.'s from specific fields, "we do look for some evidence of quantitative ability. Clearly if you're a science or engineering Ph.D., it's self-evident, Ms. Sacra says.</p>
<p>"If you're in a humanities discipline, we don't really care where the quantitative ability comes from, so long as you have it. It may be some statistical bent to your thesis; it may be some coursework you did; it may be a summer job you had as an undergraduate -- just something that speaks to the fact that you do have some quantitative skills.""*</p>
<p>Chronicle</a> Careers: 11/12/1999: Another Career Choice for Ph.D.'s: Management Consulting</p>
<p>
[quote]
Why would you want to waste 4-6 years of your life and the opportunity cost to gain work experience in a field where you could basically jump in after a few years of undergrad + MBA?
[/quote]
</p>
<p>Uh, a waste? I think most people who got PhD's view their grad school years as some of the best years of their life.</p>
<p>Regarding the notion of opportunity cost, review the calculation I performed in post #23. I think it's quite clear that it's actually the MBA *students who are *really paying an opportunity cost. Not only do they not work for 2 years, even worse, they actually have to pay to get their degree. </p>
<p>Like I said, getting a PhD and then jumping into consulting or banking can actually be considered a brilliant strategy, because not only did you not pay a penny to get your degree - in fact, you actually got paid - but you still ended up with the same job that an MBA grad got. Brilliant. </p>
<p>
[quote]
Don't get me started on PhD stipends.
[/quote]
</p>
<p>And don't get me started on MBA tuition. You think it's bad to live on a PhD stipend? What if you actually had to pay tuition? </p>
<p>
[quote]
I don't hear stories like these at my school on the west coast.
[/quote]
</p>
<p>Don't you go to Cal? </p>
<p>On-campus recruiting sessions by management-consulting companies are a big hit with Ph.D.'s at many universities. A recent McKinsey recruiting event at Berkeley drew more than 250 students.</p>
<p>Chronicle</a> Careers: 11/12/1999: Another Career Choice for Ph.D.'s: Management Consulting</p>
<p>Now, to be sure, nobody is saying that entering consulting as a PhD is the norm. I am just using it as an example to illustrate that not everybody who gets a PhD will actually stay in their field. Heck, of my cohort of people who have earned their PhD's, a significant chunk of them has already moved onto jobs that are outside their realm of study. Yes, some went to consulting or banking, but that's not the only story. For example, some did indeed start off as industrial researchers but have now been promoted to general management where they simply don't use their research skills anymore. Some Chinese guys who got their PhD's recently went back to China where to start new businesses that are unrelated to their fields of study (and the businesses have apparently been quite successful). Heck, I know one guy is thinking about running for political office. </p>
<p>The takehome point is that just because you earn a PhD doesn't mean that you're going to stay in that field forever. Many people will leave the field. I really don't think that's a controversial point, as I think we can all think of with people who got PhD's in a particular field who are no longer actively involved in that field, but have instead moved on to other careers.</p>
<p>
[quote]
You got a very interesting point Sakky. Have you ever heard of anyone entering into management consulting with a bio PhD from Stanford and a bachelors from Yale? I want to know just in case if I want to switch fields in a few years.
[/quote]
</p>
<p>Maybe this quote will answer your question. Granted, it was written by a Stanford bio PhD student who didn't successfully land the McKinsey offer. But still, it does show that McKinsey is actively recruiting Stanford bio PhD's</p>
<p>Around this time, I learned that McKinsey and Company was paying a visit to Stanford PhD candidates. I had never heard of this firm, and spent a few days doing research on McKinsey and other strategy management consulting firms. Of course, I knew generally what management consulting was, as many of my colleagues from undergrad went to work for various firms, but my understanding was that management consulting was for MBA-types. During my research I learned that companies like McKinsey were actively, aggressively recruiting PhDs from all fields. They wanted the analytical and problem-solving training that PhD programs provided. Again, I was dazzled. Travel the world! Solve problems CEOs can’t solve! Work with health care and biotechnology! Be surrounded by other scientist-minded individuals...wow! I was hooked after attending the session and talking with former biosciences PhD students like myself.</p>
<p>Bio</a> Career Center - Explorations in the Business of Science</p>
<p>Sakky, what if someone does not get his/her PhD? Will the masters he/she earn on the way do the job of landing a consulting or whatever job?..</p>
<p>Aside the various pros and cons of a PhD vs an MBA, McKinsey is still more likely to hire a MIT MBA as opposed to a MIT PhD?</p>
<p>Sakky, do you see this trend of consulting companies hiring PhDs to continue for years to come?</p>
<p>
[quote]
Sakky, what if someone does not get his/her PhD? Will the masters he/she earn on the way do the job of landing a consulting or whatever job?..
[/quote]
</p>
<p>Yes, but it probably won't be at the associate level. You'll probably end up as an analyst, which is what the undergrads get. Hence, if you could have gotten a consulting analyst position straight out of college, then getting a MS and then becoming an analyst is probably just a waste of time. </p>
<p>On the other hand, I know quite a few people who went to undergrad schools where consulting/banking firms simply did not recruit, and then entered MIT PhD programs with the specific intent of just getting the master's and getting a consulting/banking offer. It's devious and arguably unethical. But what can I say? It does work. {Heck, there are some people who didn't even get the master's yet still got offers at smaller boutique consulting firms.}</p>
<p>
[quote]
McKinsey is still more likely to hire a MIT MBA as opposed to a MIT PhD?
[/quote]
</p>
<p>Yes. I think it is primarily a matter of opportunity. The major consulting firms hang around the Sloan School all the time. Moreover, Sloan Students have access to an excellent network through the other Sloan students and alumni that can put them in contact with the right people in consulting firms and who can help them prepare for their case interviews. </p>
<p>Given that, a PhD student who can overcome those disadvantages would be fully competitive with an MBA student for consulting. </p>
<p>
[quote]
Sakky, do you see this trend of consulting companies hiring PhDs to continue for years to come?
[/quote]
</p>
<p>Not only is it going to continue, it is probably going to increase. Consulting firms would be foolish to not avail themselves of the excellent human capital produced by PhD programs. </p>
<p>Having said all that, let me also say that I don't think that consulting is the greatest of jobs. Hence, I don't think that consulting is something that anybody should really be aiming to do as a career end-goal. </p>
<p>The real problem that I see is that there are simply not enough academic/research positions available for all of the PhD's that are produced, especially in the humanities, and many of the jobs that do exist, frankly, aren't very good jobs, in that they are low-paying, have little job security, are in undesirable locations. It is rational for people to ask why they should take an assistant professor job for $30k a year at some little college in the middle of nowhere and where the chances of winning tenure are uncertain when they can earn several times that and live in an exciting city as a consultant or investment banker.</p>
<p>Thanks..</p>
<p>Hmm... why do you think consulting is not a great job?</p>
<p>I generally think that most top-level consultants can do even better. In short, I think the payoff even in consulting is not as high as it should be, relative to the amount you have to work (although it is clearly * far far better* than the payoff in becoming a researcher/academic). The real payoff is to be made in realms like private equity/hedge-funds or other alternative investment management.</p>
<p>Sakky,</p>
<p>I presume you mean the FINANCIAL payoff. </p>
<p>I take it you give no consideration to quality of life, intellectual challenge and such in your "payoff" mental formula?</p>
<p>As long as we're being strictly financial, let me take issue with your earlier comment about the PhD approach being a good deal.</p>
<p>
[quote]
So let's work out the math. Let's say that you graduate from college and get a good job for 2 years, paying $60k a year. I think that's highly optimistic for somebody with an anthro bachelor's, but let's just say that it's true. Then, assuming you go to HBS for 2 years, you pay about 50k a year in tuition and other fees. So, after all that, you're a net positive 20k.</p>
<p>Cost Summary - Harvard Business School MBA Program</p>
<p>On the other hand, you go to Harvard for an anthro PhD right out of undergrad. You don't pay any tuition, and indeed, you actually get paid a stipend of around 23k or so. So at the end of 4 years, you're a net positive $92k. If you both end up with the same McKinsey associate level job, it is quite clear who came out ahead. In fact, her strategy turned out to be a brilliant way to get into consulting. Why pay to get a degree from Harvard if you can get paid to get a degree from Harvard, especially when, career-wise, you both end up at the same place anyway?
[/quote]
</p>
<p>Unfortunately, you forgot opportunity cost in your quickie calculation. The correct math goes like this:</p>
<p>Year MBA PhD
1 -110 -60
2 -110 -60
3 120 -60
4 120 -60
5 120 -60
6 120 -60
NPV 168 -295</p>
<p>this is at a discount rate of 6%, 60K foregone salary and 50K annual cost for the MBA, A Even if you assume the "true" yearly cost of a PhD is "only" 37K (i.e. 60K forgone salary less 23K stipend), the PhD is still in th ehole 182 K at graduation. </p>
<p>If this is your idea of a good deal, Sakky, go for it!</p>
<p>
[quote]
I presume you mean the FINANCIAL payoff.
[/quote]
</p>
<p>Yep, that's what I mean. But see below.</p>
<p>
[quote]
I take it you give no consideration to quality of life, intellectual challenge and such in your "payoff" mental formula?
[/quote]
</p>
<p>The problem with that is simple - many academic/research jobs don't exactly have a high quality of life. Trust me, playing the political game in order to win tenure as an assistant prof ain't exactly a lot of fun. </p>
<p>
[quote]
Unfortunately, you forgot opportunity cost in your quickie calculation. The correct math goes like this:</p>
<p>Year MBA PhD
1 -110 -60
2 -110 -60
3 120 -60
4 120 -60
5 120 -60
6 120 -60
NPV 168 -295
[/quote]
</p>
<p>Huh? How's that? Please do your calculations more carefully next time.</p>
<p>Firstly, and far more importantly, it seems that you have made a whopping assumption that somebody really can get into a top MBA program right out of college. But as I said, at the top B-schools, probably no more than 1-2% of the students are right out of undergrad. The median age of an entering student at a top B-school is around 27-28. But I will be charitable and say that somebody required only 2 years of work experience (at the charitable $60k salary, which only a minority of undergrads will get) to get into a top B-school. Two years of work experience is after all, what most B-schools recommend as a minimum.</p>
<p>Secondly, it seems that you are presuming that the PhD student took 6 years to finish. Why? Some people do indeed take 6 years or longer. But others take substantially shorter. Heck, I know people who have done it in 2 years. In this instance, the Harvard anthro girl took 4 years, so that is what I will use. </p>
<p>Thirdly, you have double-counted with respect to the $120k salaries, because that's no longer "opportunity cost". In other words, if you want to say that an MBA student makes $120k in a particular year then the PhD student makes his stipend (that is, $23k), not "-60" or "-37". </p>
<p>So let's put in these new, far more reasonable figures:</p>
<p>Year MBA Phd
1 60 23<br>
2 60 23
3 -110 23
4 -110 23
5 120 120</p>
<p>NPV 118 169</p>
<p>Hence, the Phd girl clearly beats the MBA student by a wide margin in terms of NPV.</p>
<p>Now, let's deal with the assumptions and see if there are externally valid. I enumerate them as follows:</p>
<p>**The PhD student is able to finish in 4 years. * No doubt, some people take longer (or don't even finish at all), and the longer you take, the less financially optimal a Phd becomes. On the other hand, as I pointed out, some people take shorter. This can be particularly true if you realize relatively quickly in the process that you aren't really interested in becoming an academic anyway (in other words, that you'd rather be a consultant) and hence aren't really interested in spending time in building an impressive publication list, and so you can just do the bare minimum required to graduate. </p>
<p>*** The future MBA student really was able to find a $60k paying job right out of undergrad. ** However, the truth is, most undergrads don't get paid anywhere near that kind of money to start. This is particularly true for majors like anthro that just don't pay highly. For example, the average starting salary for anthro majors from Berkeley in 2007 was less than $35k. </p>
<p>Career</a> Center - What Can I Do With a Major In...? </p>
<p>Now, to be fair, if you really can nab a $60k a year job right out of college, then maybe you should take that. But what if you, like most new college graduates, can't do that? In that case, a PhD stipend won't pay you that much worse than what you would have earned in a job (which also wouldn't have paid you much.)</p>
<p>**The MBA student was really able to get into a top B-school with just 2 years of work experience. * I find this to be the most dubious assumption of all, for, like I said, the median age of MBA students is around 27-28. Obviously the younger you are when you go to B-school, the better off you are. And like I said, sure, if you really are one of the very few who can get into a top B-school right out of undergrad, then you should probably do that. But clearly the vast majority of people can't do that and require several years of work experience before they can get in. The more years of work you need just to get in, the lower the NPV. </p>
<p>So let's take it back to the example I used before. That Harvard anthro girl became a consultant at age 26, right after she finished her PhD. That's a year before most MBA students even start their MBA program. I think there is no question that she won the NPV battle.</p>
<p>Sakky,</p>
<p>You mean to tell me that a PhD student would have been unemployed (income = zero) if they were not in grad school? That is the only way your numbers make sense. </p>
<p>And starting point for an MBA is a red herring, because if you look at the actual data (something you seem reluctant to do except when it fits your pre-conceived notions) you would see that most PhD students don't go immediately to grad school either. </p>
<p>Time to degree? Please, whatever is in the water in Cambridge is affecting your reasoning. 4 years to finish? Look at the data:</p>
<p>Average time: 7.5 years. Shortest discipline: Chemistry at 6 years. </p>
<p>Maybe Harvard/Mit kids are faster. Sakky, you're there, why not get the data.</p>
<p>Better yet, take a course on analysis of data to learn why you don't make a case from outliers.</p>
<p>Hmm.. how do people get jobs in private equity/hedge funds? Only geniuses get these jobs?</p>
<p>Dang, 6 years on average? Where are these people getting support for that long? I had always heard of PhDs taking around 4.5 years, closer to 5. I don't know if anyone in my group (Materials Engineering) has even taken over six years.</p>
<p>Well, you go to Caltech, not exactly a typical grad school. Same thing can be said for Stanford and Berkeley, schools known to graduate PhDs in 5 years or so.</p>
<p>Yeah, but this has been true at all the places I visited as a prospective, as well as where I was an undergrad. Do students in schools that aren't ranked in the top 25-30 actually take ten years to graduate?</p>