GMAT Score Inflation
Maria |
March 3, 2023

If you are an aspiring MBA applicant who has concerns about your chances of being accepted given the recent trend of “GMAT inflation”, this episode is tailor-made for you. In this episode of Business Casual, our host will delve into effective strategies that can help applicants improve their chances of securing a seat in top-tier MBA programs despite the ongoing trend of GMAT inflation. The episode will cover valuable insights and perspectives on the impact of GMAT inflation on the MBA admissions process, as well as practical advice for navigating this highly competitive landscape.

Our esteemed hosts, John, Maria, and Caroline, will share their expert opinions and perspectives, offering valuable insights on how to build a strong application package that highlights your unique skills and experiences, and stand out from the crowd.

Episode Transcript

[00:00:07.210] – John

Hello, everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast with my co host Maria Wich Vila and Caroline Diarte Edwards. I’ll remind you again, Maria is the founder of Applicant Lab, and Caroline is the cofounder of Fortuna Admissions and the former Head of Admissions at INSEAD. I want to talk today about GMAT scores. Obviously, there’s this great obsession about standardized tests when you apply to an elite MBA program that is highly selective, and standardized scores count for a lot. And that’s because it’s one way to compare candidates from all over the world with others, because sometimes GPAs aren’t as good a reflection as a current standardized test score, even though GPAs are earned over three to four years, as opposed to a test score which is earned over 3 hours or so of a test. But what’s really interesting here is how GMAT scores have been climbing. So in the US. Alone, people who apply to US. Programs now are applying with ever higher GMAT scores. The average score of GMAT exam for those who apply to a program in the US. Is now 658. That’s up 45 points from 613 only five years ago. And just as interestingly are those who score 700 and up. In the US. In testing year 2021, roughly 23% of the exams had scores of 700 and up. That’s compared to only 14% five years ago. That’s a big jump and in Australia and the Pacific Islands, 32% of the people taking the GMAT exam now have scores of 700 and up. Maria, what do you make of this?

[00:02:06.500] – Maria

Though I think there are probably a lot of factors at play here, and I’m sure Kennedy, you, and all three of us have a lot that we could talk about here. I think the first one that jumps to my mind is probably that more and more people are taking the GRE as an option, a viable option, to get into business school. When I first started looking at MBA admissions just over 20 years ago, the GRE was something that you pretty much only submitted if you were applying to a dual degree program, and so you didn’t want to have to take two standardized tests. But it has become increasingly a viable alternative to the GMAT, and in fact, not only viable, but I would go so far as to say an attractive alternative to the GMAT, especially for people for whom standardized testing may be a hurdle or something that they don’t excel at. One statistic that I pulled up is that roughly, sort of ten years ago or so, about 12% of the incoming class at a Harvard Business School applied with a GRE score. And this most recent year, 30% applied with a GRE score.

[00:03:05.840] – Maria

So it has gone from being a niche thing that a few candidates could explain away, oh, here’s why I didn’t take the GMAT, because I had already taken this other test, and so why I have to take two? But now it’s actually become a viable, if not more attractive, alternative because I do believe that, all things considered, the GRE as a quote unquote, easier test to take. And even if it’s not easier, I also believe that there is sort of a psychological forgiveness element that happens if somebody applies with a GRE score that is not stellar, because the GRE has not been consistently used within the MBA admissions committee community. If I look at a school and I say, wow, their average GMAT used to be 730, and this year it went down to 710, I can immediately and intuitively know that’s a huge difference. But if I look at a school’s average GRE scores and I say, oh, their average went from 164 to 162 in quantum verbal or what have you, that I have a less of a I’m like, well, it only sounds like a two point difference. That’s not a big deal, right.

[00:04:06.830] – Maria

So until I think the market overall, it’s interesting. I know I have some numbers, but I also have some non numbers and some more emotional psychological arguments. And I think that because the GMAT is scored, it goes up by increments of ten versus in GRE, which goes up and down in increments of one. And because I think that an increment of one difference in the GRE is a much larger swing and percentile difference versus a ten point swing in a GMAT score. You know, I mean, some of the top GMAT scores, you’re the 99th percentile if you have like a 767, 77 to 87, and they don’t report it within a different granularity of 99.2%, 99.8%. So, in other words, because of the way how the GMAT is scored, I just think that it’s a lot easier if you’re not a great test taker to say, well, I just, you know, I got a 161 and the average at the school is 163. But that’s pretty close, right? Even if you were to then translate that same exact score, that same exact percentile to a GMAT score, it might be like a 40 point, I don’t know exactly what, but it’ll be a huge swing where we would all step back and say, whoa, that’s a pretty big difference.

[00:05:13.760] – John

But for GRE, just yeah, Maria, that’s a really good point. I’m going to just say ten years ago, can you believe it? We ran a story. It’s called schools accepting lower GRE scores. And we proved that, in fact, if you use the conversion charts put out by Educational Testing Service, which is the administrator of the GRE, basically schools were widely accepting much lower GRE scores than GMAT scores. One example was Duke. Now, back then, the the equivalent GRE score well, rather rather, the equivalent GMAT score for the those who submitted Gres was 640 at Duke, when the average GMAT score back then was 690, a 50 point difference. The difference at Michigan ross was 33 points. At Washu Olin, the difference was nearly 100 GMAT points. So I think this trend remains true today. Schools are much more willing for whatever reason. Maybe part of it is the reason you just mentioned. You know, a one or two point difference doesn’t feel as big as a ten point difference on the GMAT. That’s part of it. Also, I think that many schools are under the mistaken impression that US news does not incorporate GRE scores in its waiting for its ranking.

[00:06:50.050] – John

They didn’t back ten years ago, but they do now. But how they wait it is sort of a bit of a mystery. It’s not really explained. So I think a lot of schools think they can take lower GRE scores and not suffer in the rankings. So that’s really interesting. We should run that analysis again and see what it’s going to look like.

[00:07:13.050] – Maria

Just really quickly. That stat that you just cited where if you take the ETS GRE to GMAT score converter, so the average GMAT score for HBS for the most recent class was 730. If you take their average GRE score and put it through the same score converter, I believe it’s a 690. And when you look at percentiles, a 730 GMAT score is 96 percentile and the 690 GMAT score is an 84th percentile. So about a 10% swing, which is a pretty big difference.

[00:07:49.380] – John

That’s fascinating. Now, it is true that more non traditional students take the GRE and more women take the GRE, and that could have some impact on these numbers as well, I would think. Caroline, what’s your take on these inflated GMAT numbers?

[00:08:08.410] – Caroline

Yeah, I do think there is an element of self collection going on here. So if you say people know that average GRE is are often lower than the average GMAs, and therefore if I’m not a good test taker, then I probably should go in the direction of the GRE. Although, having said that, you make a good point that a lot of the GRE test takers, there is a different profile in the pool, right? If the GRE pool versus the GMAT pool, and schools know that and they are often more flexible on their expectations of standardized tests from candidates who bring something to the classroom that the management consultants and the investment bankers may not bring to the classroom. Right. So additional perspective, additional more diverse experience, or more diverse profile. And I think therefore that if you are one of those more traditional candidates, you might not get as much leeway as you would otherwise expect if you take the GRE.

[00:09:13.390] – Maria


[00:09:13.720] – Caroline

Because the schools are maybe taking candidates with lower Gre’s, but it’s also because those candidates have those nontraditional profiles. And therefore, if you have that more traditional profile, then you may be disappointed. If you apply with a GRE that doesn’t match to it doesn’t map to such a strong GMAT, you might not it might actually diminish your chances versus a candidate with a similar profile who applies with the GMAT and with a strong GMAT. So I think need to keep in mind the difference in profile of the test takers. But I think there is increasingly self selection going on here with many schools not requiring the test or test optional. And this is also happening in the undergraduate market in the US. As well. There’s a lot of inflation of SAT scores because students are not going to take the SAT if they don’t have to, and they’re not going to be good test takers. So I’m not sure where we end up.

[00:10:15.800] – Maria


[00:10:17.670] – Caroline

It’s an incredible increase that you’ve highlighted in this article. It’s remarkable how much it’s gone up over the past five years. And is that going to carry on? Our candidates going to continue to self select, that they will only take the GMAT if they think they’re going to do well on it and therefore the average will creep up and up? I’m not sure that and at that point is it a very useful benchmark for admissions, right? Because if people are only taking it if they’re good at the test, then it’s not a common data point. The value of having something like the GMAT or the GRE, especially when you’ve got a very diverse pool, and this was very true when I was working at Inciet. You got a diverse pool of people who come from all different educational systems, a lot of different countries, a lot of different backgrounds, incredible diversity. The GMAT can be very useful as one common data point that people have or the GRE, because everything else is completely different in their profile. And it’s very difficult sometimes to compare candidates with very different backgrounds. And if you’re getting a lot of applications from candidates who haven’t got the test or have decided to take it only if they’re going to do well, then I’m not sure how useful that is as a data point to compare people.

[00:11:43.730] – John

True. All you have to do is look. At USC’s Marshall school, all right? Their latest enrolled MBA class had an average GMAT of 732. That’s up 25 points in two years alone. So looking at the overall inflation of GMAT scores gives some understanding of how is it possible that the USC Marshall could have a 25 point increase in the class average GMAT score to 732 against Harvard 730 median? How is that even remotely possible? Well, it’s because more and more people are scoring 700 and up on the test.

[00:12:28.670] – John

And it seems I mean, if you. Go to Australia and a third of the people are scoring 700 and up, and in the US alone, it’s 23%, it doesn’t feel as special as it once was. And of course, Maria, you’ll point out that MBA admissions is holistic. Standardized test is one of many elements that are considered. How important an element today, do you. Think standardized test is.

[00:12:56.420] – Maria

Well, to Caroline’s earlier point, I do continue to think that standardized tests play a valuable role, perhaps not as a benchmark across the entire applicant pool. I do think that standardized tests should be seen within the context of a specific candidate’s upbringing and their competitive bucket. So, for example, someone who grew up in a non English speaking country and was educated in a non English language, I think it’s perfectly acceptable for that person to have a lower verbal score. That is not, to me, an indicator of their intellectual capacity. So I do think, though, that there is absolutely a room for the standardized test because you have so many different candidates from so many different backgrounds, and so these different universities all have completely different grading systems, and it’s a huge nightmare to try to figure out some sort of a way to measure them. At a certain point, you do have to choose better versus worse candidates because otherwise you can’t accept 100% of them. And so in that context where people do have to be chosen and some people have to be not chosen, I think it’s a perfectly fine thing. And if the GMAT does end up going away, I would hope that there becomes, if not some other thing to replace it.

[00:14:15.720] – Maria

Perhaps it’s not a test. Then in that case, I would hope that there would be a way to determine with more transparency what does make for a strong competitive profile. So just to make something up. If it’s not about test scores, maybe it is about in order to be competitive for a school, you have to have had a management experience of at least two years. Or you have to have had some experience with dealing with your company’s senior management and impacting senior management or some some of those more qualitative yardsticks that I think as admissions professionals we use when we’re judging someone’s competitiveness. I think maybe then if that that would have to be the way, then that we start looking at it, which creates its own set of problems.

[00:14:58.260] – Caroline


[00:14:58.450] – Maria

What if somebody’s amazing, but they work at a very large company that’s very hierarchical and does not allow them to talk to the CEO and change the CEO’s mind? So, again, in a complicated world with a complicated admissions process, I hope that the standardized tests don’t go away completely, because I do think that they provide a lot of value.

[00:15:18.150] – John

Caroline, you obviously were making admission decisions at INSEAD on candidates. How important was the standardized test to you?

[00:15:28.060] – Caroline

Well, as you say, there’s a holistic admissions process at business school, and so it is one data point of many. But it is an important data point, and it is a valuable data point, and it’s not more important than someone’s undergraduate track record, and it’s certainly not more important than their professional track record. So all of those things are important, right? The schools are looking at a lot of different dimensions, but nevertheless, it makes it harder to get in if you have a very weak standardized test score. But I think one other issue with this inflation is our candidates going to be scared off by those numbers.

[00:16:16.510] – Maria


[00:16:16.810] – Caroline

And that’s been a concern top business schools for a long time. As the average GMAT have crept up, does it deter some candidates from even considering the school?

[00:16:28.750] – Maria


[00:16:29.330] – Caroline

And I think that there is a problem there. When you look at, as you show in your article, there’s a great diversity of average scores from different countries in different regions. And if you broke that down or into different profiles, then you would see greater disparities as well. And will some candidates who actually have a huge amount to bring to business school, a lot to add to the classroom, will they be deterred remotely because of those headline numbers without necessarily understanding the context? So I am concerned about that. And Maria made a very good point about the fact that you would expect native English speakers to do better on the GMAT.

[00:17:17.120] – Maria


[00:17:17.370] – Caroline

I mean, it’s very difficult for a non native English speaker to do, especially the verbal part of the test. I mean, I speak pretty good French, but I would be very challenged to try and do a version of the GMAT in French. And business schools do factor that in.

[00:17:35.920] – Maria


[00:17:36.260] – Caroline

They they understand that if you’re a native English speaker, then it’s easier to do well, especially on the verbal, than it is for non native English speaker. And so I’m concerned that with those very scary headline numbers and that increased inflation, that seems to be continuing. Right? I don’t see where this stopping anytime soon that this could be a deterrent for some really fantastic candidates.

[00:18:02.290] – John

Yes, and you’re right. I mean, when you look at the numbers, and they’re in this article that we just did in Germany and Italy, for example, only 11% of the test takers scored 700 and up. That’s half the level of 700 and up scores in the US. Alone. Right. So clearly you look at some of the language difficulties, and it really comes through by country. Interestingly enough, in Nigeria, we know that Africa is becoming a more important part of the MBA applicant pool. Five years ago, fewer than 5.5%, less than half a percent of the test acres in Nigeria scored as 700 enough. Now 7% of them score 700 and up. That’s a big change. I’m also thinking that it’s probably true that GMAT prep has become increasingly sophisticated, and those who have the opportunity to have a tutor or to be in a class, or to even avail themselves of online support platforms, that’s probably contributed to some degree to higher scores as well. What hasn’t contributed is the test has not gotten easier. No one would agree with that. But I think the test optional policies, the fact that you can take a GRE score lower and still get into a really good school and better prep materials that are out there and more accessible, more widely accessible, because many of the online platforms that allow you to study for the GMAT cost only a fraction of what GMAT prep had cost in the past.

[00:19:50.000] – John

I think that’s an element of this somehow. Now, I also wonder, if you’re an admissions official and you’re reading about this GMAT inflation, and it’s pretty significant, how does that change the way you look at the score? What do you think?

[00:20:04.710] – Maria

Maria I mean, my take if I were an admissions official, which I have not been and Caroline has been, so I’m really looking forward to her answer to this. How I would look at it is almost not so much that a high score gets you in, but a very low score would be a cause for concern. And I think a low score would keep someone out, potentially. And again, I would look at it in context. So someone who perhaps is from Egypt, who was raised speaking Arabic and attended an Arabic, maybe they went to the American University of Cairo, but otherwise their entire context has not been in English. I would personally be more forgiving of a lower verbal score. I think I would be on the lookout for some sort of a floor on the quant number, not in terms of percentile, because, as we can expect, the percentiles of 48 on the quant used to be a pretty strong score. And now it feels like a lot of people, from a percentile basis, more and more and more people are getting a 48 on the quantity. For me, something like, okay, I would want someone to do at least a 47 48 on the quant in terms of that being their score that they get, even if that means a lot of people are doing it.

[00:21:15.930] – Maria

And I think I would just look at it within context. But I would certainly be alarmed if somebody had if I were comparing two candidates side by side, who had very similar sort of work experiences, and one of them had a dramatically lower score than the other, especially if they had not been retaken the test. I also look at retakes, right? I think sometimes people submit and this is a problem, I think, for people from cultures, from countries where the culture is very test driven. Sometimes I meet people who will say, well, I took the GMAT seven times, and I finally broke. I would have applied to business school four years ago, but it took me years and years to get that 700. And I think, oh, no, you should have probably applied seven years or four years ago, or whenever it was. And also, I tell people, you realize that they can see. They ask how many times you’ve taken the test? And so if somebody has taken the test once and got a 700 and someone else took the test six times or whatever that limit is and got a 700, you realize that it’s a little bit less impressive if it took you that many tries to get to that level.

[00:22:25.550] – John

Although doesn’t it demonstrate how bad you want it? And it’s kind of like the fire in the belly metric, because people who have that fire in the belly are more likely to be successful than those who don’t.

[00:22:37.150] – Maria

I mean, there’s fire in the belly, and then there’s setting yourself on fire accidentally. How bad do you want it? Doesn’t necessarily mean anything if you’re not that bright, right? How badly I want it. I want to become the starting center for the Chicago Bulls, and I want that really badly. But the fact is, I’m a five middle aged woman. It’s not going to happen. So no matter how badly I want it, I can appreciate the tenacity involved, right. If somebody gets a low score and then they don’t retake, that to me, is a bit of a red flag, like, well, did you not look at what the requirements are? Did you think that we wouldn’t notice? So at least at a minimum, I think a retake does show some level of commitment. But I think there’s also a level where it just gets to be a little like, you know what, maybe you should just apply for a school that is not the school that you initially were hoping to get into.

[00:23:33.670] – John

It’s interesting for this story, we interviewed the person at Kaplan Test Prep, and that person mentioned that there’s no longer a stigma about taking the GMAT multiple times. And in the past, there had been a bit of a stigma. And as we do know, there are business schools who tell people, hey, take the GMAT again, get another 20 points, and we’ll admit you. That does happen, and I’m sure you might have seen that in some of your clients. Now let’s go back to that other question. The central question is, how does an admission official interpret these higher numbers? And let’s go to Caroline on that since she actually had to make these decisions at one point.

[00:24:20.050] – Caroline

Well, it very much depends on the context of the candidate, right? So the schools know that certain candidates typically do better than others on the GMAT, and they will have that in mind when they’re evaluating a candidate. So as we’ve said, if you’ve got an otherwise strong profile and you’re from a background where candidates typically do well on the GMAT, but you don’t do well on the GMAT, right, you’re going to be compared to other candidates who have done well on the GMAT. So it’s just it’s not going to look good. So it really depends on who you are. So they’ll definitely be looking at the profile, and they will have certain expectations of how a candidate should do. But at a certain point, you know that it doesn’t make a lot of difference. Right. If a candidate gets a 740 versus a 750 versus a 760 versus a 770. Right. Once you’ve met a certain benchmark, and I agree with Maria that quant score can be very important, especially for profiles where the candidates may not have a lot of quant experience in their work and may not have a strong quant academic background from the undergrad, that quant becomes very important. So the schools will be looking to see if someone has met a certain threshold. I’ve spent more time looking at the breakdown of the scores than the total scores.

[00:25:44.840] – John


[00:25:45.010] – Caroline

I think the breakdown is more interesting and tells you more about a candidate’s academic ability, and you’re looking to understand different things from different parts of the test, and you’re looking at that also in context of their undergraduate experience. Candidate who has in my case, when I was applying to business school, I had studied languages at undergrad, and I didn’t have a strong quantitative background. And so I knew that I needed to do pretty well on the GMAT to demonstrate that ability because that is an important part of the academic experience of business school. So the context remains very important. But at a certain point, if the candidates just keep the scores keep creeping higher and higher, I’m not sure that it’s really benefiting them that much.

[00:26:40.960] – Maria


[00:26:41.170] – Caroline

You need to show that you could reach a certain academic level. And beyond that, the schools are going to be looking at other things. They’re going to be looking at what else do you bring to the program, going to look at your professional experience. They’re going to be looking at what you would bring to the community. I’m not sure that having a super high GMAT score is going to impress them more than someone who’s got fantastic leadership experience or has done something very impressive in an extracurricular dimension. So I do think that candidates often overindex the value of having a super high GMAT and think that that can make them look like a really strong candidate, when in fact, okay, it makes them look like a really good test taker, but doesn’t necessarily make them look better than another candidate who is stronger in other dimensions.

[00:27:35.650] – John

Yeah, that’s really true. The other thing is there is to some degree in arms race and GMAT scores, and some of the reasoning behind that happens to be US. News and the fact that they wait this number, and it does discourage people. One of my pet peeves is, look, you don’t need a 700 to give an admissions official confidence that you can complete the core without difficulty. I don’t know what that number is. Maybe it’s 650, maybe it’s 600, maybe it’s even less, but it isn’t 730. And yet everyone wants to report a class average above 700 if you’re in a school that’s highly ranked. Now, the Stanford number, incidentally, for the latest class, 737, that’s going to turn off a lot of people. A lot of people are going to say, hey, I don’t have a shop at Stanford if I’m not way up there with a GMAT score and people are not going to apply. And that’s a sin because obviously we do know that admissions are holistic and an average means that there are a lot of people who score below the average and still get in. But you look at 737 and you say, wow, if I’m sitting at 680, I don’t have a chance. Why should I even bother and apply? What do you say to people who use that rationale and basically talk themselves out of applying?

[00:29:04.180] – Maria

Maria well, I think, first of all, if you’re going to use that rationale and talk yourself out of applying, you’re probably not the sort of person that Stanford wants anyway. I’m being really serious. Like, Stanford is looking for people who are going to change lives, change organizations, and change the world. If you see a single barrier, potential barrier to your acceptance and you give up, you’re probably not the sort of person who’s going to change the world in general. And so, yeah, I mean, of course it’s a 737 because they accept people who are, you know, truly exceptional. And people who are truly exceptional in one dimension of life are often truly exceptional in lots of dimensions. And so, of course, they’re going to be the sorts of people who do very well on the test. What I would tell that person on a Pragmatic level to their face, as opposed to what I would just say to myself in my head, which is the one I just said out loud, is this is a perfect candidate where if let’s assume that everything else is perfect. Like they had launched a new division of their A company and expanded their company into a new market and turned around a failing division and all that stuff that I know Stanford loves to see, amongst other things.

[00:30:07.330] – Maria

Let’s say that they had that, but they have a 680 GMAT. I would just say take the GRE. This is the perfect person, in my opinion, to take the GRE. It is for all the reasons we’ve been discussing, it is a less judgy test. I think it’s easier to get a higher percentile. And even if it weren’t, I think that the levels of judgment on a slightly lower GRE score are not as high as the levels of judgment on a slightly lower GMAT score.

[00:30:35.210] – John

Yes, true. Okay, for those of you out there who want to look at our story, it’s called GMAT Score Inflation. Now, nearly 20% of test takers are scoring 700 or higher. We have the numbers by country and region of the world for the latest year as well as five years earlier. So you can see how inflated scores have actually become. Well, Maria and Caroline, thanks once again for your insights. Really. Appreciate them. And for all of you out there, thanks for listening. This is John Byrne with Poets and Quants.

GMAT Score Inflation
Maria |
March 3, 2023


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