I was sitting around pondering my life choices, and I came to an important question: Is doing a PhD in Business worth it? I am currently a 3rd-semester student in University of the Cumberland’s PhD in Business program. Doing a PhD has always been a goal of mine, and I have already decided on its value. However, I might be able to help you make the right decision for yourself. When it comes to your life choices, you are the one who must decide. All your goals must be balanced with the worth of the object being sought. You must try to make decisions in a reasonable manner or else, you will never reach your goals.
Whether or not a PhD in Business is worth it, will depend on your goals. You must balance not just specific career goals, but also long-term life goals. The value of something is closely tied to your goals. To someone who hates schooling, doing a PhD is worthless. To someone who loves learning and hopes to become an expert, a PhD is highly valuable. Most PhD programs are funded; however, there are some which do not include funding. Additionally, some students may only get partial funding or no funding while attending a funded program. Thus, there is a financial aspect to deciding on doing a PhD. The finances must be balance with intrinsic worth. You can reasonably accept an alternative with less than desirable financial outcomes as long as it has value in other ways. However, determining the other ways to value a PhD comes down to your desires.
Opportunity Cost and the Downsides of Doing a PhD
For some people getting a PhD is a financial endeavor. They hope to increase their income with advanced education. If you are doing a PhD for a financial reason, then you have chosen the wrong path. Earning a PhD in Business may slightly increase your income; however, the time and effort sunk to get the PhD far outweighs most income increases. For example, R3ciprocity founder Dr. Dave Maslach stated that it took about twenty years for his PhD to break even with alternative options.
Let’s examine some additional factors. The types of people who choose to do a PhD in Business typically already have experience in industry, an MBA, or an undergraduate degree in business/economics/accounting. (I entered my PhD program with a BA and MA in philosophy. However, I had also worked as a licensed financial advisor and was trained to be a realtor.) For people who are already established, choosing to do a PhD will likely lead to a dramatic loss of income and delay their career aspirations. As a student, I make about 1/5 of my prior salary. It can be tough for anyone to go from being a manager or senior leader to being a student. Symbolically, becoming a student represents the loss of power, income, and status.
To examine potential losses in-depth, let’s look at some income data. According to ZipRecruiter, in my state of Kentucky, the average salary of someone with an MBA is about $80,000. The average reported salaries for most other states are close to this amount. Finding the average PhD in Business salary for Kentucky was a bit harder. So, I took the average PhD (all disciplines) salary and averaged it with the average nationwide PhD in Business salary, the estimated average was $91,254.
I then entered these amounts into a Grad School ROI calculator and found that lifetime earnings with a doctorate would not exceed the opportunity cost. For my calculations, I assumed that the cost of school was $0, because the position was funded. I assumed that the student had no existing student loans, but would take out a small student loan of $15,000 at 6% while in school for incidental expenses. So even with an $11,254 salary increase, a PhD in business leads to lower lifetime income than continuing working as an MBA.
Now admittedly, my analysis has some flaws: 1) it relies on reported online salaries and may not be accurate. 2) It only accounts for one state, Kentucky. 3) Data on PhD in Business salaries in Kentucky is minimal, so some assumptions had to be made. With these three things in mind, the critical point is that roughly five years of schooling for a PhD is a long time, and it is hard to make up for that lost income without a substantial increase in income. So, the decision to leave one’s job and do a PhD should be taken lightly. Additionally, this analysis highlights some other conditions. If a student is unfunded or only partially funded, then they ought not do a PhD in Business (or any other discipline for that matter). A lack of funding will make the PhD opportunity cost so high that it will be actively harmful to them. If a student has excessive student loan debt before doing a PhD, they should not do it either. Student loan debt dramatically increases the opportunity cost. Thus, whether or not to get a PhD in Business must adhere to financial common sense.
Some of the additional limitations to doing a PhD in Business are: 1) doing a PhD can be a lonely experience, 2) you will have to work very hard, 3) you will become highly specialized, and 4) you will likely have to move to do the degree or to find work. With all these limitations, it may seem like there is no good reason to do a PhD, most things which come with high cost also have unique benefits. The limitations of getting a PhD are paired with some advantages as well.
On Becoming a Professor
Additionally, the only career aspiration which is truly served by doing a PhD in Business is becoming a professor or administrator; however, no sane person wants to join academia. The life of a professor is one with incredibly long hours, typically receiving less pay than industry, and the haunting specter of “publish or perish.” Although there are some benefits to becoming a professor, you get to travel to conferences, teach classes, and at many schools, you design your own curriculum. Notably, most professors must first struggle with years of being an adjunct professor and earning peanuts with no job security. Academia can seem like a pyramid scheme run by universities. A few people at the top reap all the benefits, while an army of temporary workers toils away. The army of temporary workers creates new PhDs who are then convinced to join academia. The folks at the bottom envy those at the top, but most will never make it to the top. Many adjuncts have unwittingly trapped themselves in a cycle of job insecurity, and they don’t even realize it. My key point is that academia is not the only place where PhDs can work. Thus, if you want to do a PhD for the right reasons but are scared off by the difficulty of getting a tenure track job, no worries, you don’t have to be a professor to have a good life. Although, as a PhD working in industry, you may find yourself competing with MBAs for a lot of the same jobs.
The Benefits of Doing a PhD
There are different conceptions of what is a good life, and not all of them are correct. Conceptions of the good life, which include much learning, are probably more true than other conceptions. Getting a PhD may be the right choice for those who love learning, gaining skills, and earning status. When you decide whether or not to do a PhD in Business (or anything for that matter), the primary motivator should be intrinsic as opposed to extrinsic. Although, one ought not be such a dreamer as to do a PhD no matter the cost; and end up significantly poorer as a result. The opportunity costs incurred on the path to a PhD are far too significant to be ignored; however, that does not mean that there is no value to a PhD. For example: 1) there is some prestige attached to holding a PhD, 2) you will be qualified for a lot of unique jobs, 3) You will learn a lot (especially how science and statistics works), and 4) you will become an expert at something.
For me, the most important aspects were learning a lot and getting the associated prestige. When one holds a PhD, they get some prestige, and they earn the title of “Doctor.” While I was in the military, I grew to love titles, because they showed what stage of life a person was in. Although I only had the very lowly title of “Staff-Sergeant,” the title and what it represented were still incredibly valuable to me. When I left the military, I found an aching hole in my identity, where my title used to be. So, I became determined to earn a new title to fill the void in my identity. Thus, a PhD has a lot of intrinsic value for me regardless of any increases in income.
My love of learning also makes it much easier to deal with the daily grind of PhD studies. I don’t feel as though I am losing or missing out on anything, because my days are filled with new knowledge. One of the great benefits of a PhD program is that it will teach you more than what some people will learn in their whole lives. A person’s life is more exciting, fulfilling, and entertaining when it contains a lot of learning. The knowledge you gain will allow you to see the interconnectedness of things, and you will gain a new perspective on your old ideas.
Whether or not you choose to do a PhD is a very personal decision, with outcomes that may not be immediately clear in the moment. I encourage all people who love learning to pursue a PhD in Business. However, if you are just chasing a PhD to become a professor or because of some misplaced ideas about the salaries of PhD holders, then you need to reassess your goals.
This post was written by Zachariah Renfro, a USAF veteran and a third semester PhD student in Business Administration on behalf of Dave Maslach. This is part of the R3ciprocity project (Check out the YouTube Channel or the writing feedback software). R3ciprocity helps students, faculty, and research folk by providing a real and authentic look into doing research. It provides solutions and hope to researchers around the world.