It's the Ridiculously Small Admit Numbers, Stupid

Articles about business PhDs like this one make me crazy (selected paragraphs with my emphasis in italics):

"The upsurge in applications from people like Ferguson is good news for those worried about the projected business faculty shortage, which had been expected to worsen in the next four to five years. In recent years the overall production of business PhDs has fallen just as enrollment in undergraduate and master-level business programs has risen. Of even more concern, the shortage of business faculty is projected to increase to 2,400 openings by 2012, according to projections from the American Association of Collegiate Schools of Business (AACSB) made before the recent upsurge in applications."

"However, an increase in applications is no guarantee of a bumper crop of new business faculty. One problem is that not all business PhDs go on to become faculty -- about a third go to work for private industry, frequently consulting companies. Another problem is that PhD students, who typically receive a tuition waiver and stipend, are an expensive proposition for B-schools, and many of them are already strapped for cash. "Doctoral programs in business are cost centers for universities," says the PhD Project's Milano. "And in dead economic times, when universities are struggling, one of the things they have to look at [is] reducing is the number of doctoral students, because they cost money.""

"Still, with the upsurge in business PhD applications, all signs are now pointing to an increase in the supply of new PhDs in the future...."

I have not heard anything from any person affiliated with a business school say that the predicted shortage in PhD-holding business professors is due to a lack of applicants or even qualified applicants. (However, some programs would like to draw away highly-qualified students with elite backgrounds from traditional economics PhD programs, for example. But the desire to get students who are even more betterer is not the same as believing that their current applicants aren't good.)

The fundamental problem, which this writer acknowledges briefly by quoting somebody who knows the score, but then moves away from as though it's not all that important, is that business schools limit the number of PhD students to such a small number that they already cannot graduate the number of business PhDs needed to match their own hiring needs. The problem is going to get worse in the future, but it's already here. What is needed is an increase in the number of admits, not the number of applicants.

More applicants simply means more competition amongst applicants for a very few slots. For instance, the article mentions that in this past cycle, UPenn's Wharton School (which is, to be fair, the top business program) received 1,182 applications for their PhD programs, up 34% from last year. However, they only matriculate about 30-40 people. That's in the range of 3% of applicants actually attending Wharton. (And it is not the case that they admit 200 people or something and only 30 decide to attend. Their acceptance rate is probably still under 5%.)

It is frequently observed that having a "god" profile (bachelors and masters degrees from highly-regarded programs with high GPAs, near perfect test scores, strong recommendations from professors known to and respected by adcom members, excellent statement of purpose, good research match to faculty, etc.) is not enough to guarantee you a slot at a top 10 or even top 20 program. (I have to assume this is true to a great extent in other very competitive PhD fields as well.)

And business PhD programs do not suffer the same attrition as many other programs - where people can't pass their exams and are given a masters degree as a parting gift, realize there is no reliable career path from finishing the PhD in their field, can't continue living on their stipend, put so much energy into teaching additional courses at their school or a local community college to make ends meet that they don't ever finish the dissertation, etc. - so it's not even the case that there is a volume of drop-outs that schools can more successfully encourage to complete the PhD, thereby magically increasing the supply.

I recognize that the writer of this article has not spent the insane number of hours scourging around for information about the business PhD appliation process that I have. Still, I would expect a reporter for Business Week to be able to recognize the rather perverse supply and demand issue at work here, especially when someone so helpfully points it out.