Pricing of higher education: The case of top-ranked MBA programs

Andy W. Chen and Hao Chen

Economics and Business Letters, 2021, vol. 10, issue 3, 310-318

Abstract: Tuition fees of full-time MBA programs with similar structure can vary greatly from around USD $20,000 to USD $220,000. This paper explores the effects of post-graduation salary, reputation, and their interaction on such high discrepancy in MBA tuition. Using a unique dataset of international MBA programs, we found that program value is positively correlated with post-graduation salary. This relationship is stronger for more prestigious programs whose values are impacted more by graduate outcomes. In addition, this relationship is greater for North American programs, but smaller for European programs, suggesting a geographical effect. These results provide managerial implications for program administrators and universities offering professional business programs. These insights can be extended to other industries of intangible experience goods.

Date: 2021
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