Business degrees

Inside Higher Ed reports a substantial drop in freshmen choosing business majors: a one year decline from 16.8% to 14.4%.

Alas, it's not due to freshmen recognizing that business degrees are often heavily constrained by AACSB regs.

Rather, they're chalking it up to general antipathy about business:

Also, in one year, the percentage of freshmen who listed their "probable career" as one in business dropped from 14.1 percent to 12.1 percent. This is an all-time low for the survey; the previous low was in 2003, when 13.8 percent reported that their goal was a career in business.

“I think that a business career doesn’t look as appealing as it once did, nor does it come with a guarantee of being well-off financially as in the past,” said Linda DeAngelo, co-author of the accompanying report and assistant director of research for the Cooperative Institutional Research Program at HERI. “Some of that can definitely be attributed to the general sense that we spent a lot of time over the past year raking business executives and people in high finance over the coals. There’s certainly a trickle down, and I don’t think high school students are immune to that overall feeling about business.”

From the report:

As best I'm aware, we haven't seen any such shift in enrollments at Canterbury, but I certainly wouldn't mind at all if more of our Econ majors did it through Arts or Science.

Advantage: Arts over Commerce

A prospective economics student taking a first year in arts rather than commerce will have greater exposure to a wider range of disciplines; in Commerce, AACSB's core requirements kill student ability to take anything outside of Commerce, at least in New Zealand's three-year undergraduate degree. Having to specialize too early has costs, says Ofer Malamud:

In addition to providing useful skills, education may also yield valuable information about one's tastes and talents. This paper exploits an exogenous difference in the timing of academic specialization within the British system of higher education to test whether education provides such information. I develop a model in which individuals, by taking courses in different fields of study, accumulate field-specific skills and receive noisy signals of match quality to these fields. Distinguishing between educational regimes with early and late specialization, I derive comparative static predictions about the likelihood of switching to an occupation that is unrelated to one's field of study. If higher education serves mainly to provide specific skills, the model predicts more switching in a regime with late specialization because the cost of switching is lower in terms of foregone skills. Using survey and administrative data on university graduates, I find that individuals from Scotland, where specialization occurs relatively late, are less likely to switch to an unrelated occupation compared to their English counterparts who specialize early. This implies that the benefits to increased match quality are sufficiently large to outweigh the greater loss in skills from specializing early, and thus confirms the important role of higher education in helping students discover their own tastes and talents.

AACSB

The best argument in favour of seeking AACSB accreditation, to my mind, is that it provides a mechanism for business schools to reduce their tax rate from the central administration. Meeting AACSB is expensive and some universities view their business schools as cash cows to fund the bench sciences or arts; having an external constraint can whittle back that cross-subsidization and let business schools keep more of their own earned revenue. Fortunately, at Canterbury, each College pays a fixed per-student tax to the central administration (the "contribution margin") and avoids too large of cross-subsidies.

The Chronicle of Higher Education notes that some schools are now questioning whether the benefits of accreditation are worth the costs.

In thinking about selecting a new dean for its business school this year, Southern New Hampshire University considered whether the new leader should guide the school to gain accreditation through the Association to Advance Collegiate Schools of Business, as more than 500 colleges have done.

But after seeing estimates that the costs of meeting those standards could top $2-million annually, Paul J. LeBlanc, president of the university, decided that approval from the business-college association wasn't worth the institution's time or money.

The article provides some hard numbers on costs but only anecdotes on benefits of accreditation. The best anecdotes talk about school budgets increasing (my story, above); the worse anecdotes talk about whether international students rely heavily on AACSB certification. Those latter anecdotes of course have contrary counter-anecdotes:

Mr. Halfond, of Boston University's Metropolitan College, said that whether or not an institution has earned a specialized accreditation is probably not a major concern of most students and applicants. Because of that, he said, some colleges may calculate that the cost of seeking and maintaining accreditation is far greater than that of losing a few potential students.

In fact, Steven F. Soba, director of undergraduate admissions at Southern New Hampshire, said that during his 17 years as an admissions officer he could think of only a couple of instances where parents had inquired about any kind of accreditation.

When Canterbury started down the AACSB path, I was utterly unable to find a single reputable study putting hard numbers on benefits of accreditation. If anybody knows of any, I'd love to see them. Event studies showing effects on foreign student enrollments after having achieved accreditation would be nice; so too would be event studies on external assessments of school reputation, controlling for the portion of increase that's due only to increased ability to extract resources from center (because schools for whom such opportunities are limited would otherwise overestimate potential benefits).