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How you make the same money as an MBA graduate

 Those that attend the hallowed halls of Strathclyde University  doing an MBA (one of the highest rated in the UK) may rightly feel smug about their prospects in life. Their average starting salary after leaving will be around £60,000 a year; not bad for a starting wage considering the average UK wage currently stands at around  £23,000 according the the Office for National Statistics. But in truth you probably make the same money as an MBA graduate.

After graduation some, about a quarter, will move into consultancy. These jobs involve a huge amount of travel, often 7 days a week, every month, forever.

Others will go into private equity, hedge funds or investment banking, where they help large companies merge, create complicated investments and deal with high pressure, large transactions. The hours are usually from 9am until 9pm..or later.

Some end up working for FTSE 100 companies, in technology or other fields. Pressures are again high, with constant demands for growth and success with the shareholders constantly demanding more.

All of these graduates end up working 80-100 hours a week – a huge amount when you consider that there are only 168 hours in a week, in total.

So do they really make so much money?

Whatever salary system you are paid on, there is a simple fundamental working across all jobs. That is the division of wage by time or hours worked. We all have so many hours, and how much we work will have a direct effect on this hourly wage. An Oxford MBA graduate may make 3 times as much as a teacher or shop manager, but they most likely work 3 times the hours. Working that many hours leaves little time for playing with your children, spending time with friends, gardening or whatever other hobby you might enjoy. The higher wage will allow for delegation in many aspects of life (getting a gardener or cleaner or nanny) and will also pay for glamorous holidays, fancy restaurants and a nice car; it will allow for more fun, or more expensive fun. But it won’t allow for more time having fun.

Either path is great, but which is the right path for you?

Some may thrive on the pressure and reward involved in these well paid jobs. It’s their thing. Which is great. But others might prefer to see their hardy geraniums grow, indulge in a hobby or spend time with their children. So for them the career as a teacher or manager (or anything else with a similar life balance) might make them happier. Identify which one you are, using internal reasoning and discounting external expectation.

They all make the same, give or take

Here is what the Oxford MBA graduate makes compared to a shop manager and a teacher.

For the MBA figures we used https://www.emolument.com/salary-reports/universities/strathclyde-university-and-business-school/14127

For the teachers we used http://www.bbc.co.uk/news/education-27087942 and http://www.payscale.com/research/UK/All_K-12_Teachers/Salary

For the retail manager we used http://www.payscale.com/research/UK/Job=Retail_Store_Manager/Salary

Whats the bottom line here?

Although some may argue that they are a teacher and work way more hours than that outlined above, or a banker who works way less, there is still great meaning in the figures. They all earn around £13 an hour, all told. The key is to know your hourly wage and then balance that against the trade off between work/life balance. Only by doing this can you decide off you are on the right track or if you need a change. Of course the real secret is to have a job that you really love, as this will offset any lifestyle trade off that you have to make. On the negative side, those that work so many hours that they earn less than the minimum wage, regardless of salary should take a long hard look at their life and see what can change. Perhaps it’s time for them to become a teacher?

Average life expectancy is around 75 in the developed world, and you will sleep for 1/3 of that. That’s only 18,000 days left. That’s reduced even more by the dribbling at the start and possibly at the end. So do the maths and really value your time.

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Weight Loss and the law of diminishing returns

Weight loss and the law of diminishing returns

Weight loss has a connection to economics in more than one way. In economics, which is where the phrase “diminishing returns” originates, the law of diminishing returns is also referred to as the law of diminishing marginal returns. It states that “in a production process, as one input variable is increased, there will be a point at which the marginal per unit output will start to decrease, holding all other factors constant. In other words, keeping all other factors constant, the additional output gained by another one unit increase of the input variable will eventually be smaller than the additional output gained by the previous increase in input variable. At that point, the diminishing marginal returns take effect”.

In layman’s terms, in most processes initial improvement usually comes quickly, but the closer one gets to the maximum goal possible, the harder improvement becomes. More work has to be done as gains become more marginal.

In sports training this is easy to see. For a couch potato, going from nothing to being able to run a 5k race might only take 8 weeks; to do it reasonably well that is. So a huge improvement in just 2 months. Yet for an elite level athlete, 4 years of hard training might mean an increase of only 0.2 seconds over 100m. So as the body becomes close to the absolute highest levels of fitness possible within that person’s genetic makeup, the harder it becomes to improve; the more work that has to be done to make this happen.

In weight loss, there is a similar pattern. An obese person, for example, eating carefully and exercising in the correct way might be able to lose 4-7lbs a week. We see this in TV shows like the USA’s Biggest Loser. However, the closer one gets to an  optimal  healthy weight, the harder it becomes to lose weight.

It must also be noted that the closer one gets to optimal weight, weight itself ceases to be a useful measurement. The balance of muscle mass and fat mass will be more important. Size over weight, if you like. The best way of measuring improvement at this point is through body fat percentage.

Weight loss is never linear – even eating exactly the correct amount of energy needed to create a 2lb deficit a week won’t necessarily lead to exactly 2lbs lost in that week – our hormonal systems are the main reason for this. However, the more you have to lose, the more linear it should be as the law of diminishing returns hasn’t kicked in yet. You will also be able to lose more than the recommended 2lbs a week.

The closer you get to that elusive size 10/12 though (32 waist for the guys), the harder any linear weight loss will become. You will also have less leeway in terms of treats and “mistakes”. This is the law of diminishing returns kicking in. At this point the 2lb per week rule should be applied. Any more and your body will start to utilise muscle for fuel. This is disastrous at it will lower your metabolic rate, making further weight loss even harder. The law is even more relevant for someone trying to get from slim to super toned or a six-pack. Almost all the eating leeway has gone; both training and nutrition must be close to perfection to progress and reach the goal.

You must also now take into account that as you near perfection, size and shape become more important than weight. Static weight loss over a week or two that seems disappointing (considering how careful you’ve been with food) may well have translated into size loss, shape change and a reduction in your body fat. At this point it’s important to stay the course and rely not so much on the scales as on a tape measure, a snug pair of jeans that are getting that tiny bit looser or a personal trainer with callipers to measure your body fat.

So beware the law or diminishing returns. Don’t let weight be your sole guide. Remember that weight, size and shape are not always the same thing.

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