Business PhD Applications on the Rise

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Application Boom

Meanwhile, PhD program directors at some of the leading business doctoral programs in the country are also experiencing a similar surge in interest. At Columbia Business School, PhD applications are up about 27% this year over last, while applications have jumped 25% at Stanford University's Graduate School of Business. University of Chicago's Booth School of Business has seen a whopping 40% increase in applications, nearly half of which were people applying to the school's finance program, says Pradeep Chintagunta, director of Booth's PhD program.

"We were expecting some increase, but I don't think we had a good sense as to the magnitude of it," Chintagunta says. "If people were thinking of getting a PhD two years down the road, recent events have essentially precipitated an earlier application."

At the University of Pennsylvania's Wharton School, applications this year have jumped 34%, to 1,182. Nearly one-third of the applications were for the school's finance PhD program, which experienced a 54% increase in applications over last year. Most of the bump in applications came from a surge of talented undergraduate students or recent graduates deciding to bypass the working world and instead head straight into academia, says Robert Inman, Wharton's vice-dean and director of doctoral programs. Those fleeing the financial world represented only a small percentage of applicants, he says. This year there were just 28 students with a background in finance who applied to the school's finance PhD program, compared with 19 in 2008. Five of those applicants previously worked at Lehman Brothers, he says.

"It's not that we're getting all the quant jocks from Wall Street who suddenly lost their million-dollar jobs and say, 'Well, what the heck, let's go get a PhD,' " Inman says. "What's causing the increase is the really smart kids who would have been tempted to go to Wall Street and maybe stay there, but now the jobs are not available."

Earning a PhD also holds appeal for those who are in the workforce but are worried about their job security.

Downturn Decisions

Alan Ferguson, 39, a senior business manager at a mortgage institution that received federal bailout funds, says he first began considering applying to a PhD program last spring, when the housing crisis began to surface. Ferguson, who declined to identify his current employer, had been in the workforce for 17 years, taking breaks to earn an MBA at Emory University's Goizeuta Business School (Emory MBA Profile) and a Master of science in real estate at Georgia State University's Robinson College of Business. With the downturn in the economy, he decided to take his schooling one step further, applying to Georgia State's business doctoral program this year.

"I just wanted to keep every available option open because I didn't know what was going to happen this year or the next," says Ferguson, who was accepted to the program and will be attending next fall. "Things have just slowed down tremendously, and I don't know when there is going to be another point in my career when I have the time available and opportunity to go ahead and pursue this advanced degree."

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 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, and even a possible decrease in demand. For one thing, more professors may put off retirement for several years because of the downturn in the economy, says Chicago Booth's Chintagunta, In addition, the magnitude of the looming faculty shortage may not be as bad as the one AACSB predicted if growth in demand for business education begins to level off, he says.

Even so, some say it's too early to tell if the laws of supply and demand will result in an end to the faculty shortage anytime soon. "Everything we've seen up till now has indicated that there seems to be a healthy demand for business education," he says. "But I think we need to look a bit more carefully as to what the overall impact of both those things will be on the demand for faculty in the future."

Damast is a reporter for BusinessWeek.com.

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