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Prentice Chronicle Commentary: Happiness, Not Money is How We Should Judge MBA Programs

The Chronicle of Higher Education, November 8, 2009 By Robert Prentice, professor of business law at the McCombs School of Business

Any sensible person would rather be happy than rich, although many people often confuse the two—business students among them. Those who choose to attend business school on the assumption that an M.B.A. will help them change jobs, make more money, and therefore be happier are very likely misinformed.

Everyone needs enough money to satisfy basic needs, but those are easily met in the salary range that most people occupy before they earn M.B.A. degrees. Studies show that once basic needs are met, more money generates little, if any, additional happiness. Business schools and their students should take a cue from recent research in hedonic psychology—the science of happiness—that suggests a reorientation of purpose rather than a pursuit of more monetary wealth.

For example, Jonathan Haidt, an associate professor of social psychology at the University of Virginia, has found that people who strive primarily for achievement and wealth are less happy, on average, than those whose efforts focus on relationships and intimacy, religion and spirituality, and "generativity"—that is, leaving a legacy and contributing something to society. Haidt's research, as reported in his book The Happiness Hypothesis and elsewhere, indicates that a devotion to helping others is an important path to a meaningful, satisfying life. Spending money on others increases the happiness of most of us more than spending money on ourselves does. When we act kindly toward others, rather than selfishly, reward centers of the brain, where dopamine receptors are located, light up like Christmas trees.

Other studies indicate that people who act ethically tend to be happier than those who do not, suggesting that we are evolutionarily designed to derive pleasure from receiving the approval of others and from doing the "right" thing. Brain scans indicate that when we act consistently with social norms, primary reward centers in the brain are again activated.

People with a strong moral sense even tend to be more prosperous than others, according to Richard Layard, an economist at the London School of Economics and Political Science, in his 2005 book, Happiness: Lessons From a New Science. It seems that doing the right thing is its own reward in more ways than one.

Perhaps, then, business schools should be judged by the happiness they generate for their graduates.

Unfortunately, M.B.A. programs are currently ranked—by U.S. News, BusinessWeek, and other unduly influential publications—using criteria that prominently include starting salaries for graduates and salary differentials pre- and post-business school. Rankings have such an important impact on M.B.A. programs in their intense competition for students, faculty members, and resources that it is unsurprising that the schools often try to game them—say, by admitting students not because they are the strongest applicants, but because they are interested in finance and consulting, which have historically been the highest-salaried jobs.

I propose that short-term measures of starting salaries or salary differentials be replaced in the rankings by those of long-term happiness. U.S. News and its ilk could survey the happiness of applicants and compare it with their happiness levels five, 10, and 20 years after graduation. Bruno Frey, an economist at the University of Zurich, notes that psychologists have learned how to measure happiness, and that "ways of measuring experienced utility are continually being improved." Those methods range from brain imaging to simple subjective surveys. The different measures correlate well with one another, indicating that the simple surveys, subjected to various reliability studies, should suffice.

Measuring happiness would encourage business schools to focus less on training students for the highest-paying jobs and more on preparing them for careers they will find satisfying in the long term. Surely high pay correlates with types of work that many students would enjoy. True, many will still aspire to be consultants, or financial titans who make the big bucks while working long hours under extreme pressure. But business schools should teach students that people are often poor judges of what will make them happy, and that if they think the answer is money, they are probably mistaken. Schools must convince students of the simple but lasting pleasures of relationships with family and friends and of serving others, contributing to the common good, and leading a moral life.

Students must be given the skills to follow their passions and not just to chase the almighty dollar. M.B.A. programs will always need to offer courses in how to invent, package, and market the latest forms of complex financial instruments. But if business schools truly want to serve their students well, they will offer more courses on how to market and finance nongovernmental organizations, how to manage profit and nonprofit organizations legally and ethically, even how to lead a meaningful life.

Today administrators of business schools are disappointed when a graduate chooses a $60,000-a-year CFO position at a local charity over a $120,000-a-year job on Wall Street—a decision that hurts the school in the rankings, although it may well increase the graduate's long-term happiness. Valuing happiness above income would align those two goals—securing a strong institutional reputation and creating a meaningful life—and more fully measure the value that M.B.A. programs are truly adding to their students' lives.

Comments

#1 I tend to disagree with the

I tend to disagree with the view that happiness should be the main determinant behind ranking of all business schools. Neither happiness nor money deserve this place; in fact we should weigh more to the modus operandi used by respective institution to determine whether an institution is ahead of other or not. After all, it is the mental level that a student achieves in the course of his studies that tells about the worth of an institute that helped him achieve that and never could money tell us about the intellectual growth of a person. Actually, the mental level that I am talking about relates to the ability of a person to contribute toward the progress of world and make this world a continuously improving entity. All the progress that the world have made so far is the result of the efforts of individuals who had mental level ahead of their peers and who by the dint of hard work and passion added handsomely toward the development of the world. By making happiness as the only parameter, we may ignore research and other qualitative improvements taking place in business institutes. What if holder of an online MBA degree gets to a top position in a charity institute and is happier with his job; would we simply put that online mba school to a top position immediately without looking other factors like: instructional techniques, future technological improvements and others? Moro over, would we do so even knowing that virtual learning methods are at nascent stage and simply can not substitute on-campus methods of teaching?

#2 Very well written article. I

Very well written article. I most agree with the comment, "Students must be given the skills to follow their passions and not just to chase the almighty dollar." and yes it is truly not the dollar but the real meaning of happiness that all of us are going after.

#3 Very thought-provoking

Very thought-provoking article. I'd suggest replacing hedonic psychology references with positive psychology, as positive psychology is the branch of psychology that has been diligently spearheading efforts in the science of happiness since 2000. Also, one might consider measuring work engagement and meaning rather than subjective well-being or happiness, as employee engagement is correlated not only with increased individual happiness but also with greater productivity, higher profitability and better collaboration within organizations. What we measure is what we pay attention to, so as a person with a Masters in Positive Psychology who is also a MBA candidate, I'm eager to see schools widen the scope of what's ranked.

#4 Rob, I agree with you. I was

Rob, I agree with you. I was only trying to say that for most people in the world its nearly impossible to detach happiness from money. So even if we start ranking on happiness, it would be ultimately governed by money.

#5 Amit, I don't think you and

Amit, I don't think you and Prof. Prentice are in disagreement. Your example from developing countries speaks to Prentice's sentence, "Studies show that once basic needs are met, more money generates little, if any, additional happiness." In developing countries those basic needs must still be met perhaps, for the individual as well as the family, which would necessarily mean a focus on securing a high-paying job. Ultimately though, whether you are in a developing nation or elsewhere, happiness is the ultimate goal for all.

#6 Nice article. I agree with

Nice article. I agree with you for some parts but I would like to add my two cents on the analysis of one of the hypothesis presented in this article. You said studies indicate that "we are evolutionarily designed to derive pleasure from receiving the approval of others and from doing the “right” thing". Here we are assuming that while society is approving of other human factors of happiness like acting kindly, being helpful etc. it is disapproving of your quest to earn high salary. In many parts of the world (esp. developing countries) the most common expectation from a growing child is to ace in exams and complete schooling from best of the colleges, obtain the best of the degrees and do a job that is most accredited for its remuneration and respect. Once you have done that and earned good money it expects you to pay back to the society/family to further recognize you as the right person doing right things. To meet these objectives and derive happiness out of social recognition of your moves you would need to earn well. The definition of good earning would also be subject to revision basis the current standards. And chasing this goal also means going to a high ranked business/ engineering or law school and which in turn means that schools would be ranked on salaries. While you are true in saying that money is not the only factor which governs happiness, I would contest that it is one important factor with other factors. So you need to strike a right balance. If we were to go purely by happiness and forego any monetary index then Bhutan would have been the best place to live on earth for maximizing its happiness index at the cost of what rest of the world calls "development". Unfortunately the definition of this balance would come different for different individuals and as time would progress people who would give it purely to money would keep moving the standards of good salary up. So right after the business school if finance and consulting would pay a salary which is far higher from the salary you would get in the job you like to do it would be hard to take that offer as the n society would not regard you as the person who made the right choice; at least at that moment, we can keep the case of making an exceptional career in long term to prove them wrong aside as when it will happen probably the need for an explanation would have vanished. I might be sounding a little confusing but if you analyze it carefully you will find that it’s very similar to vicious cycle.

#7 There is a difference between

There is a difference between viewing money as a means to happiness (an errant view, per the research cited above), and the unadulterated love of money, which is pure greed. Both views, however, are welcome and appropriate in the typical MBA program, on average. The shareholder value ideology teaches that investors are "wealth maximizing, risk averse". Greedy cowards, in short. I suspect the current situation of institutions pushing for high salaries for all their grads, despite the drawbacks, will not abate until the most influential of them collectively disavow greed as a value system. In America, this will not happen. It's an interesting idea to try and mix an ideology that upholds happiness with one of the two mentioned above. Jesus of Nazareth taught, "Watch out! Be on your guard against all kinds of greed..." (Luke 12:15). But Gordon Gekko said, "Greed...is good. Greed is right...greed - you mark my words-...will...save...the USA." Unfortunately it's this last guy who resonates more with modern MBA program ideology, to our collective detriment.

#8 Mr. Jurvick makes a good

Mr. Jurvick makes a good point that many graduates from the top bschools do, infact, go onto the public sector. However, that is not the issue. The issue is that the bschools would rather have those individuals go forth and accept the private sector, high paying jobs. Therein lies a major point of the article. The individuals who accept public sector jobs are (probably) already heeding the message of the article, which is to place happiness over a blind pursuit of money. I also believe that it is very hard to measure the notion of happiness for it varies greatly from individual to individual. Thus money is often used to measure the caliber of a school since it is an easily measureable. But for me it comes down to a simple thought: The reason individuals go on to pursue MBAs and other higher degrees is to make more money? Why? To have more spending power. Why? In hopes of being happy. So if we could measure happiness, the end goal of most every graduate, then why shouldn't we rank schools according to that factor, rather than by measuring intermediary factors.

#9 While I understand the

While I understand the overall sentiment of the article, it is not the place of a business school to "convince students of the simple but lasting pleasures of relationships with family and friends and of serving others, contributing to the common good, and leading a moral life." Schools should be responding to the needs of students and equipping them with the skill-set required to succeed in their chosen profession - not preaching their version of a balanced/ideal life. At the same time, I agree that schools shouldn't be pushing students towards certain professions and to the extent that re-aligning incentives will help, I am all for that.

#10 This is a lovely thought, but

This is a lovely thought, but unworkable in practice, and seems simply to be a way for students at lower-ranked schools to make themselves feel better compared to Harvard/Wharton/Stanford bschool students. The top bschools aren't all about making money -- a large % of top students from top schools go into the public sector. And surrounding yourself by the best and brightest does contribute to your psyche and happiness. Finally, making a lot of money is not exactly incompatible with happiness! Top students will NEVER choose a lower-ranked school over Harvard or Wharton b/c some magazine says its alums are "happier," which can be attributable to a lot of other variables besides what school you went to!

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