Source: The Wall Street Journal
by Lindsay Gellman
Nov 4, 2015
The b-schools at the Massachusetts Institute of Technology, Harvard University and Northwestern University are adding new courses and investing in research that probes income inequality at home and abroad. Some of the new courses consider remedies for inequality, while others focus on helping students market to consumers at the bottom of the wealth pyramid. As M.B.A.s aspire to become top earners, schools say they must understand the forces that affect people at every income level.
“Everyone’s waking up to the seriousness of the problem,” said Thomas Kochan, a professor at MIT’s Sloan School of Management, who teaches “Managing Sustainable Businesses for People and Profits.” He said the elective takes on the question of building companies that drive both high productivity and high wages.
The course has been popular on campus, Prof. Kochan said, with about 7,900 others signing up to take a free, online version of the course. Mr. Kochan has also co-written case studies that look at issues resulting from pay disparities, such as one detailing how workers at the Market Basket grocery chain in the summer of 2014 fought the ouster of the company’s chief executive, who insisted on offering robust salaries and benefits for workers in traditionally low-wage jobs. The CEO was ultimately reinstated.
In class, Mr. Kochan tries to quash the idea that keeping labor costs low is the only way to turn a profit. He says employers can maximize workers’ productivity by paying them “good salaries”—“practices that produce profits and good jobs.”
Sloan has also teamed up with the nonprofit Hitachi Foundation to offer more M.B.A. and executive-education courses centered on the social impact of management decisions.
Academic interest in income inequality has grown since the recession, said Richard Parker, a professor at Harvard University’s Kennedy School of Government. More M.B.A.s and joint-degree students are enrolling in Kennedy School courses like “Presidents, Politics, and Economic Growth: From World War II to Obama” that involve discussions of income inequality.
“This is a generation that’s very concerned about fairness,” he said.
Dan Kahn, a recent graduate of Kellogg’s M.B.A. program, said his time with Teach for America in Baton Rouge, La., ignited his interest in understanding inequality.
Struck by the “disparity in resources, in access to opportunity,” Mr. Kahn, now 32 years old, founded a nonprofit to help local high-school students from low-income families get accepted to elite colleges.
Kellogg appealed to Mr. Kahn in part because of courses like “Public Economics for Business Leaders: Federal Policy,” taught by Prof. David Besanko, and before graduating he wrote a case study exploring whether government-seeded child-development accounts—such as 529 college-savings plans—could help combat inequality in the U.S. As he prepares to begin work at Boston Consulting Group Inc., Mr. Kahn said he hopes to bring his studies of inequality to bear in his consulting work.
Mr. Besanko, whose work is part of a larger Kellogg effort connecting public policy and private business, said he is incorporating the case into a course to discuss the role of social mobility in narrowing the income gap.
Because M.B.A.s may one day be in positions of influence in politics or within their own organizations, “I want them to be aware of the impact of private action on the level of income distribution,” Mr. Besanko said.
A Harvard Business School elective, “Business at the Base of the Pyramid,” teaches students about the world’s lowest earners, many of whom live in emerging markets and earn less than $10 a day.
The course outlines how products can be tailored to low-income consumers, who often overpay for staples like water and health care, according to Kash Rangan, who co-teaches the course with Shawn Cole, a professor whose research on financial services in emerging markets has attracted wide notice in the academic community.
Students understand that the class isn’t just for do-gooders, Mr. Cole said. “Some people taking this class are going to run a global business,” he said. “There’s often an alignment between personal enrichment and improving the wealth of others. Students see a real opportunity here.”
