The currency amounts reported in our benchmarking studies for management education are nominal. This means they are measured in current dollars and do not account for changes in the purchasing power of money due to inflation.
For a more detailed explanation of this topic, including the implications of using nominal versus real values in global market research, please refer to our blog article: Should Purchasing Power Parity Be Utilized in Global Market Research Benchmarking Studies?
Summary Takeaways from the Article:
- The assumption underlying PPP is that exchange rates reflect relative purchasing power. The extent to which this is true will vary over time, across geographies, and across products/services;
- Management education programs are not commodities – many different reasons besides currency fluctuations underlie price differences;
- PPP analysis would be greatly complicated by the reporting of program costs in multiple currencies, use of common currencies such as USD, programs spanning multiple locations with multiple native currencies, and programs drawing students from multiple locations with multiple native currencies;
- Results could be used to infer that some currencies are under- or over-valued – a slippery slope that we want to avoid;
- Results could be susceptible to the impact of individual programs with large cost changes or individual countries with large currency swings; and
- PPP results could be distorted by regional (euro) or widely used intermediate (USD) currencies.