2017 MBA Trends: Are the Students Smarter?

by on October 20th, 2015

In 1999 when Forbes published its first MBA ranking, the MBA students graduating from the top five b-school on the list—Harvard Business School, Tuck, Stanford GSB, Berkeley Haas, and UCLA Anderson—entered one of the most attractive job markets in history. Tuition fees in the late 1990s were approximately half the tuition fees for 2015. Now that’s a great ROI.

But was gaining admission to a top business school back then any easier? 8,893 applications were received by HBS fifteen years for the 880 spots in its incoming MBA class, compared to 9,686 applicants who applied there for 937 places in 2015. In 1999 Wharton received 7,273 applications for 789 places, compared to 6,590 applications this year, from which 861 new students enrolled this fall.

Examine the data a little deeper and you’ll find that what’s really changed is the student profile. For a number of the top b-schools, the 2017 MBA Class has a higher percentage of female and international students, as well as the highest average GPAs and GMAT scores in history.

For example, look at Wharton and Northwestern Kellogg. Both of the incoming classes at these schools have 43% women, the highest percentage ever documented for a top ten US business school. Compare this to last year at Kellogg, with 38% women, and between 31 and 32% at both schools in 1999. Dartmouth’s Tuck has also seen a sharp increase in female students: In just the last 12 months, the percentage of women at the school has risen from 32% to 42%

So where are all of these women coming from? Although in 1999 women comprised 38.9% of worldwide GMAT test takers, with 52,059 US women, in 2014, women represented 43.3% of worldwide test takers, however the number of US women test takers dropped significantly to just 33,386. Their numbers are largely compensated by an increase of female test takers from the East and SE Asia market, where the 44,718 females who took the GMAT last year represent 60% of those taking the test from the region.

Another major shift in today’s MBA class profile is the increased percentage of non-US students at the top US schools. Just look at Columbia Business School, which leads the way with 42% international students for the Class of 2017, compared to 27% international fifteen years ago. Kellogg has again broken its personal record this year, with 40% international students, and many other top b-schools have also seen an increase in non-US students since 2001.

But what’s going on with the declining number of US test takers? In just the last five years, there’s been a 30.2% decline in the number of US men taking the GMAT. This year, US citizens represent only 35.7% of all GMAT test takers, down from 68.7% fifteen years ago.

And finally, are the most recent MBA students much brighter than their predecessors? All of the US business schools ranked in the top 10 publish an average undergraduate GPA above 3.5, and they’re seeing more students who already hold, or are about to pursue, another advanced degree. But it’s the GMAT that really stands out for a significant increase in applicant scores.

For the 14th consecutive year, Chicago Booth has reported another increase in the average GMAT score of incoming students, to a record high of 726 for the school (compared to 684 in 2001). Wharton’s average GMAT score of 732 in 2015 matches the record Stanford GSB average in 2014, and Kellogg has seen its average GMAT score for the incoming class rise by 8 points, to an average of 724

According to some GMAT test prep experts, the rise in the overall GMAT average is due to higher quantitative scores, attributed to many more students from the Asia-Pacific region who are now taking the exam (students from this region represented 44% of all test takers compared to 22% in 2005). The mean raw quantitative score for Asia-Pacific test-takers is 45, compared to 38 for students across the globe. For US students, the mean raw quantitative score is just 33. Therefore, we can reasonably conclude that applicants from the Asia-Pacific region are pushing upwards the mean raw quantitative scores on the GMAT.

It seems as if GMAT test takers from the US are being ‘outnumbered’ in more ways than one.

With some programs receiving a record number of applications, including Michigan’s Ross School of Business where applications are up 30 percent and Yale’s School of Management with a 25 percent increase, admissions committees can be more selective in deciding whom to admit. This can certainly explain why we’re seeing higher GMAT scores at top programs.

Doesn’t this kind of score inflation send a misleading message about which skills are most important in selecting future business leaders? Although there’s no doubt about the importance of strong analytical skills, with the world of big data only likely to gain in importance, should the GMAT score outweigh the importance of many other factors?

While the GMAT only claims to predict a b-school applicant’s ability to grasp the material offered through the core curriculum in business school, perhaps it also indicates the determination by applicants to master a challenging test, and will surely provide a welcome refresher on quant skills before grappling with net present value and discounted cash flow.

And if you examine closely the average GMAT scores at the schools at the top of this year’s Forbes Business School Ranking, you’ll see a positive correlation between test scores and the median financial 5-year gain. Although the question still remains whether the MBA Class of 2017 is any smarter, as part of a highly populated Generation Y they’ve certainly learned the significance of studying hard in the race to the top.

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