Twenty two thousand five hundred dollars times 6 semesters is a lot of money for a terminal degree in management. $135,000, plus expenses; plus lost time; lost experiences with family and colleagues; lost opportunities to pursue other ventures; emotional stress and strain and much more. The value is almost immeasurable. But I tried, anyway.
If I use a conservative average salary of $XXX,XXX and determine the hourly amount of $70 then with a few simple assumptions about the time spent doing homework, paper projects, re-doing emails that were unanswered, revising and resubmitting homework, reading and studying one can arguably arrive at a cost of approximately of $165,000 for a running total of $300,000 ($135,000 + $165,000). Add the difficult to measure time away from family, friends and colleagues at let’s say conservatively double the rate to $140 an hour and one raises the total costs to $560,000. Opportunity costs cannot be added because they are incalculable. Add expenses for travel, hotels, conferences, editors, ink, transcriptions, books, etc. and we approach $575,000. Many might agree to a range of between $500,000 to $600,000 for the DM degree if one gets comfortable to my simple assumptions. If one breaks this down further by class and by paper projects we have approximately 22 events in a 3-year program. Thus, if each event is prorated evenly, each activity costs approximately $22,700 to $27,300. Of course, it is probably inappropriate to evenly prorate all the events; so to be fairer, let’s assume that the statistics courses and the papers are worth more since one of the DM reputations at Case is one of substantial rigor and writing contributions to literature. Therefore, let’s assume statistics and paper projects are worth double the amount of any other course. Eight events for statistics and paper production, each worth double all other coursework and we get a new range for 8 “rigorous” training events and 14 “less rigorous” training events. Consequently, the less rigorous price per event is in a range of $16,667 to $20,000. The rigorous events will fall in a range of $33,334 to $40,000. One can evaluate on an activity-by-activity basis whether or not each course was worth the price. But, my question was really about the DM program holistically.
I recognize it would not be fair to look at costs alone without considering the benefits as well. We received meals, snacks and drinks during our DM residencies and free parking for those of us who drove. I think I ate enough “trail mix” during the residencies to gain about 5 pounds each time we met. I am certain I wasn’t cheated of my share of food. A generous estimate is $75 a day for these goodies or $6,000 for the three year total. We get a cap and gown rental free and a tam at graduation that is ours to keep. This amounts to $275. Let’s add the value of access to experts in so many areas of management and statistics our faculty. If we assume that the average salary was $XXX,XXX for our faculty and we got one third of their time divided by 18 in our cohort, then each of us will be allocated approximately $70,000 for all three years of time spent by each professor on our individual activities. Add to this an overhead factor for the use of this fabulous facility. After all how many DM students anywhere in the world get to use a Frank Gehry building to go to school? None, except, those lucky enough to attend CWRU!!! I estimate this to be a factor of 6/10s of the salary cost of the faculty so an additional benefit of $42,000 per person. And of course, the able body assistance of Marilyn and Sue helping us with countless tasks and conveniences. I calculate each person is attributed $12,500 for these great ladies. It is impossible to calculate the value of the increase in knowledge we each received at our advanced age in life. I assume these offset the opportunity costs previously discussed and equally incalculable. We currently stand at a net cost of about $369,225 to $469,225; a very substantial sum for the DM degree. There are three remaining significant ingredients missing in my computations: the increase in earnings one can expect from this degree, the Case name value and last but not least the relationships that will last and last.
Earnings increases are difficult to estimate because everyone attending the DM is already an accomplished executive and more than likely to reach peak earnings no matter the additional DM degree. However, with added credentials and experience, most employers or clients will pay more for added knowledge and skills. I can’t estimate the current salaries or work life estimates because I don’t have the data. But, assuming our cohort gets a 15% increase pay for the rest of their work life and given our average age and expected remaining work life, I assume we each will realize on a present value basis after taxes an additional $233,000 in benefits from the DM. We are now down to an approximate net cost of between $133,000 and $233,000.
The CWRU name is synonymous with the leader in DM degrees. We hold so many firsts in the area we are the tip of the spear. A value on the Case name is certain to bring with it the respect and prestige befitting its reputation. I estimate the Case name and reputation over any other university offering this degree to be $250,000. Just look at the Cleveland Browns naming rights to their stadium worth $100MM and the Browns stink! The math is simple: excess benefits over costs are between $17,000 and $117,000 and now we must consider if the DM is underpriced?
Of course, we can’t calculate an accurate and comprehensive estimate of the cost of the DM or its benefits. As a fun exercise, I did this to determine for my own satisfaction the ultimate cost of the one remaining benefit that arises from the DM degree. That is simply the satisfaction of doing something only a few hundred people in the world have ever done. The satisfaction gained from doing something that a lot of family, friends and colleagues would have never attempted. That same group openly voicing their support for our courage and efforts but quietly and secretly saying, “you have to be nuts to do that!” But most of all and most importantly, the privilege of sharing this experience with a cohort of colleagues randomly selected by fate or dumb luck and thrust together to enjoy the trials and joys of the DM is not surprisingly immeasurable. That benefit is priceless. The answer to the question is the DM worth it? That is easy! When priceless enters any equation, it becomes among the most treasured items known and without a doubt worth it and more!
Dave Jones is an associate professor of accountancy at Case Western Reserve University, email dej34@case.edu. He will receive his DM degree on May 19, 2013.
