Was it Worth it?
By Ocean on Jan 9, 2008 in Money Saving
Here is a program that readers may find helpful. If anyone is wondering whether to go for that Master’s degree, MBA, CPA, CFA, etc. you’ve probably put a lot of thought into it. You might be making a passable salary now, but you’d be making a much more attractive one with a few more letters after your name. On the other hand these letters cost, in terms of tuition money, time not earning any money and / or the foregone salary itself. Will it really be worth it?
Even if you are already taking the course or attending the school, should you simply be springing for the job that pays the most once you’re done? Will you be able to afford that slightly lower paying job that’s located in your favorite neighborhood and always seems filled with smiling people? How do you decide which job you can afford? You’ve just spent all that money and time on those letters; how do you know if this job will be worth it? Here is an easy method for figuring all of this out, concocted and developed by Anthony Ababon. Just open it, fill out the part in Yellow, and you will be told if your decision will pay off within the next 10 years and / or the next 20 years. We could ask him to give us more years’ worth, but let’s see if there any demand for it first. Also, if you would like to ask Anthony any questions, you can do so by leaving a comment.
Enjoy!
Ababon’s “Was It Worth It?” Program
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Here’s my question to all those who acquired a Master’s degree and especially for those with a MBA: was it really worth it? Did you really learn so much in your two or so years of extended study that a firm would find it worthwhile to pay you the extra salary associated with the higher degree? I guess what I am getting at is whether or not a Masters truly anoints you with such a greater business ability that you’re “worth” 10k+ more than those without it right off the back. Please enlighten me as I am pondering whether or not I should pursue a Masters degree as well.
Jason | Jan 10, 2008 | Reply
I do have a Masters degree but not an MBA, and the difference between me and an MBA, is that he has proof of credentials. I can have read 10 books about What they do/don’t teach you at HBS, but he can prove knowledge and ability which I can only claim to kind of sort of understand.
I work in management now, and hopefully will aquire the necessary skills, but will still be years behind an MBA graduate.
Rebecca | Jan 14, 2008 | Reply
I think we’re touching on the interesting and somewhat related subject of signaling here. If Rebecca were to have all the knowledge that an MBA acquires, but did not have the MBA per se, would be she at a disadvantage? Likewise if Jason decided to go through with the Master’s program and completed every course and every test, but decided not to accept the diploma, would it be harder for him to find a high paying job than if he had? We would like to think that both Rebecca and Jason will not be at a disadvantage when pitted against candidates with Master’s degrees, since they possess the same level of knowledge, but more often than not I believe they would be. It might be interesting to explore this in a future post.
The “Was it worth it” program, however, assumes that one achieves the knowledge as well as the credentials.
Ocean | Jan 14, 2008 | Reply
I wonder how many years of on the job experience would be equivocal to that of earning a Masters degree in terms of salary and acquired knowledge. Or is it possible that by earning a Masters, you are essentially shifting your salary supply curve to where it would never come into contact with the curve of someone who doesn’t have a degree (assuming that the knowledge acquired in those two extra years of study can be related to ‘on the job’ experience). Any ideas?
Jason | Jan 15, 2008 | Reply
I think that’s exactly correct. If you think of salary as the output of a factory, there are decreasing marginal returns for each input of labor and capital. The only way to increase the output is to introduce a new technology. Since salary is directly correlated to education/innate skills and experience, and there are decreasing returns for each year of experience (For example, imagine your parents’ ability to use computers relative to yours.), then with each year and change in technology, your additional year working results in slightly less experience than the previous year. If you graphed it, it would look like a positively sloped curve resulting in fewer increases in income for each year. This explains why everyone eventually plateaus.
Assuming this to be true, then the only way to increase your salary is to increase your technology level e.g. innate skills (which by definition you cannot) and your education.
Clearly, going to school is a good way to get a higher salary curve and meet chicks. Oh yeah, to answer your question, without the MBA, you could probably achieve the same level of income as the MBA guy, but it would take more years/experience.
Billybob | Jan 29, 2008 | Reply
I agree with Billybob wholeheartedly. I will also try to upload a graph of what he is talking about. Jane went for a 2 year Master’s degree. John didn’t (This is in terms of salary, not taking into account student loan costs). Let me know if you cannot see it correctly.
Ocean | Jan 30, 2008 | Reply