P-P-P pick up a better ranking

25 September 2025

Ian Hawkings gives his view on why PPP is wrong and what might make a better FT ranking.

The Financial Times Master's in Management rankings dropped a couple of weeks back with strong results from Chinese and Indian schools, as has been the trend in recent years. This year, for the first time, there were three Chinese schools in the top ten. Three Indian schools were the top performers for weighted salaries (as the FT reported itself). And therein lies a question.

A central feature of the FT methodology is its use of purchasing power parity (PPP) to adjust alumni salaries across countries. While this adjustment is intended to create a level playing field between graduates working in different economies, it seems to me as though it also introduces distortions that risk undermining the fairness and credibility of the rankings as they are.

At its core, PPP is an economic tool used to compare the relative purchasing power of currencies. It tells us how much a basket of goods would cost in one country compared to another, smoothing out differences in price levels. For global comparisons of living standards or GDP, PPP makes sense. But when applied to graduate salaries, the effect can be misleading.

Take the case of a graduate working in Mumbai earning the rupee equivalent of $30,000 versus a peer in London earning $100,000. At face value, the UK salary is clearly higher. Yet with the FT PPP calculation, the Mumbai salary would conservatively be inflated to the equivalent of $90,000 or more. This suggests the two graduates are equally compensated in “real terms.” For day-to-day consumption in India, that is broadly true - but the comparison collapses when considering what many business school graduates actually value: global mobility, international career opportunities, and the ability to repay loans that are denominated in hard currencies, not PPP-adjusted dollars.

Add to this the fact that PPP is aggregated across a whole country. For a large country like India, and many other countries, there will be a huge difference between low cost cities compared with higher-cost places like Mumbai. Many Indian MiMs will work in places like Mumbai or Hyderabad, so their uplift will consequently be even greater.

By leaning as heavily as it does on PPP, it seems likely that the rankings unintentionally favour schools in emerging markets, where nominal salaries are lower, but cost of living is also less. Indian and Chinese schools, for example, can appear higher on salary-based metrics than their graduates’ actual take-home pay would justify in an international context.

Given the fact that elements tied to salary outcomes account for around 30 percent of the FT ranking, the consequences can be significant. The FT rankings are tight, with small differences in overall scores often covering big chunks of the final list – as a result, PPP-adjusted figures can swing a school’s position to a large degree. The FT itself groups the ranked schools into four groups, with group 3 running from rank 38 to 78, suggesting small differences across many schools.  In a tight grouping of schools, PPP, divorced from substantive changes in teaching or student outcomes, produces distorted outcomes and impacts credibility for prospective students.

The FT has led the way in creating a rigorous, data-driven global ranking system, and I do think that it is still the best suite of rankings available to potential business students. But it should think about revisiting the use of PPP. One way to do this might be to report both nominal and PPP-adjusted salaries, clarify their limitations, and reduce their dominance in the overall score. This would give prospective students a clearer, fairer picture of what different programs deliver. Another option would be to just use percentage salary increase and forget weighted salary altogether – thereby circumnavigating the issue around comparing currencies and looking at the relative improvement in earnings pre and post-study.

Business school rankings are useful for those looking to study – our own research shows time and again that they are amongst the main tools prospective students use when shortlisting schools and making their choice. But as the world evolves at pace, and student and employer expectations change accordingly, PPP remains a well-meaning but flawed tool in the FT methodology - one that risks distorting, rather than illuminating, the global business school landscape.