Rolf Dobelli on college education and selection bias

Whenever we confuse selection factors with results, we fall prey to what Taleb calls the swimmer’s body illusion. Without this illusion, half of advertising campaigns would not work.  But this bias has to do with more than just the pursuit of chiseled cheekbones and chests.  For example, Harvard has the reputation of being a top university.  Many highly successful people have studied there. Does this mean that Harvard is a good school?  We don’t know.  Perhaps the school is terrible, and it simply recruits the brightest students around.  I experienced this phenomenon at the University of St. Gallen in Switzerland.  It is said to be one of the top ten business schools in Europe, but the lessons I received (albeit 25 years ago) were mediocre.  Nevertheless, many of its graduates were successful.  The reason behind this is unknown – perhaps it was due to the climate in the narrow valley or even the cafeteria food.  Most probably, however, is the rigorous selection. 

All over the world, MBA students lure candidates with statistics regarding future income.  This simple calculation is supposed to show that the horrendously high tuition fees pay for themselves over a short period of time.  Many prospective students fall for this approach.  I am not implying that the schools doctor the statistics, but still their statements must not be swallowed wholesale.  Why?  Because those who pursue an MBA are different from those who do not.  The income gap between both groups stems from a multitude of reasons that have nothing to do with the MBA degree itself.  Once again we see the swimmer’s body illusion at work: the factor for selection confused with the result.  So, if you are considering further study, do it for reasons other than a bigger paycheck.

~ Rolf Dobelli, The Art of the Thinking Clearly, Chapter 2: "Does Harvard Make You Smarter?"

BW: MBAs flocking to private equity (2007)

Every decade, another faddish career opportunity dazzles the nation's business schools. In the 1980s, MBAs dreamed of Wall Street fortunes, swaggering their way into penthouses and private planes. During the dot-com bubble, it was about vesting swiftly and starting a foundation by age 30.

Today job lust among B-schoolers is fiercest for the gilded, clubby preserve of private equity. "Absolutely, it's become the hot job for MBAs," says Maury Hanigan, president of New York's MBA Scouting Report.

From the Wharton School to the University of Chicago's Graduate School of Business, it sometimes seems as if private equity is all anyone is talking and thinking about. MBA programs have always had private equity clubs. But B-schools at New York University, Dartmouth, and Columbia all report record memberships in these networking fests. At Wharton, nearly half the student body is a member of the private equity club. Conferences starring such legends as Blackstone Group chief Stephen A. Schwarzman sell out months in advance. And the schools have been falling all over themselves to add classes teaching everything from innovative dealmaking to the art of wielding "influence" within a firm.

Some see this as a leading indicator of yet another bubble. We know where the earlier stampedes to Wall Street and Silicon Valley ended. In five years, when these junior barons want to start their own funds, will the wash of money still be in private equity? Then again, what better school for a lesson in risk?

~ BW, "What B-Schoolers Lust For Now ," January 22, 2007, by Michelle Conlin