MBAs and the Law of Diminishing Returns
Picture this: you’ve just shelled out ~$250,000 for an MBA, using your “Microeconomics for Managers” textbook as a cocktail coaster, and spent two years perfecting your “I’m deeply interested in your company” face at networking events.
I've worked in banking and capital markets since I started my career. I get it. I speak with MBAs, CFAs, quants, all types of people with incredible pedigrees all the time. I, too, flirted with the idea of getting an MBA, watching as many of my peers took the plunge.
It always puzzled me that these mostly smart professionals have willingly subscribed to foregoing 2 years of work, to go school, knowing it's not really for the education. It's for the network - the ability to rub shoulders with other smart, bored and possibly burnt out early career professionals.
But it's 2025, the world is changing fast and the truth hit me harder: MBAs are increasingly becoming an overpriced accessory in the age of AI.
The Part That Matters
The actual value of an MBA boils down to one thing: your community or network. Every MBA pitch begins with a whisper about how you’ll hobnob with future titans of industry. Stanford, Harvard, Wharton — names that litter Wall Street and Silicon Valley. It’s an alumni directory with some deferential perks. And a smug sense of entitlement. And yet, even that is no longer enough:
- Harvard Business School: 23% of the Class of 2024 were unemployed three months after graduation, up from 20% in 2023 and 10% in 2022. (Source)
- Stanford Graduate School of Business: 18% unemployment, double the 9% reported three years ago. (Source)
- Northwestern's Kellogg School of Management: 13% unemployment rate, triple the previous year's figure. (Source)
- MIT Sloan: 13% unemployment, more than double the 5% reported in 2021. (Source)
For a long time, the network really mattered if you were in the top echelon of programs. But the barriers to entry are diminishing. The world is smaller, more opportunities are transcending borders and the network is only meaningful if you’re exceptionally talented or creative.
But if you’re still figuring it out, you’re likely paying for two years of cocktails and corporate jargon bingo. And you’ll probably be back at some corporate job at the end of it… 🥱.
AI is the Great Equalizer
The world of white-collar, knowledge work is on fire, and AI is the arsonist.
Why would I hire someone to run complex financial models when I can just as easily create an AI to do this for me - mind you, an AI that is cheaper, faster, and doesn’t complain about burnout. MBA coursework — finance, operations, strategy — is all just fodder for algorithms now. We’re in an era where AI systems can basically retrieve the entire world's knowledge - they can deftly move between finance, biology, computer science and help you decode religious dogma. The sheer level of information that can be retrieved from most AI systems outstrips any living human today.
And we’re only getting started.
LLMs can already write better business memos, research reports, conduct analysis and aggregate information better than most junior analysts. Tableau automates data visualization that would have taken hours. Even networking — the vaunted crown jewel of the MBA experience — is being disrupted with new tools and ways to stand out.
This leads to an awkward reality: the skills MBAs teach are no longer scarce and are losing their eminence in the corporate ladder. AI is democratizing access to expertise, which undermines the very foundation of traditional prestige economics. The degree itself feels increasingly like a Veblen good in a gilded cage of diminishing returns—a relic of an era where MBAs signaled expertise.
MBAs’ Lazy Value Signaling Exposed
More than ever, MBAs expose us to a simple idea - humans are shockingly lazy when it comes to signaling value. The MBA referral system is the prime example. “Oh, you’re from Kellogg? Here’s an offer.” It’s a tribalistic shortcut that says, “I don’t want to evaluate your actual competence, but your school name makes me feel warm and fuzzy.” But this favoritism isn’t just simplistic; it’s self-defeating.
For-profit businesses don’t care about alma maters. They care about outcomes. It’s one thing to rely on someone’s connections for an introduction, It’s another to believe that a shared graduation year equates to competence. And yet, here we are, giving the corporate equivalent of a high school superlative undue weight.
Ironically, this blind reliance on referrals makes companies weaker, not stronger. Favoritism shrinks talent pools at a time when innovation demands diverse skill sets. The AI era rewards outliers and creative thinkers, not careerists and pedigree parrots.
$500K for a Network?
The MBA racket is predicated on a “what if”—what if you don’t get an MBA and miss out on the connections that lead to unimaginable success? But the data is clear: the returns diminish fast, especially if you’re not in a top program. For everyone else, it’s just an expensive gamble on a career lottery ticket. And let’s not forget that the cost of an MBA isn’t just tuition—it’s opportunity cost, loans and interest, and two years of your life in a classroom. Let that sink in.
Let's not forget that these MBA programs are businesses. And like any business that markets itself by capitalizing on human psychology - MBAs rely on the sunk-cost fallacy to perpetuate their mystique. Once you’ve spent the money, you’re emotionally invested in defending it—no matter how thin the returns actually are. It’s a psychological trap wrapped in Ivy League branding.
"I guess we'll never know where Harvard gets us"
I’ll admit - The Ivy League branding, the extravagant trips, the promise of C-suite conversations over lattes - it’s all very enticing. But it’s 2025, and I see what AI is capable of. More than ever, the MBA feels less like an investment and more like an indulgence.
The network? Overpriced. The knowledge? Automatable. The prestige? Fading.
So before you write that six-figure check to the Executives of Stanford or Harvard Inc., ask yourself: can you actually create value rather than seeking it? Because if you can, you might just outsmart the system.
And maybe you’ll realize that the greatest flex in the AI age isn’t having an MBA, but proving you didn’t need one in the first place.