Estimation of the Internal Rate of Return to the Two Year Post-BS PharmD Degree

This study estimates the internal rate of return (IROR) to the post-BS, two year PharmD degree over the Bachelor of Science pharmacy (BS) degree. Rates of return were estimated using a cost-benefit methodology based upon the economic theories of human capital. Data used in this analysis come from the 1990 Purdue national pharmacy compensation survey, a rich and unique source of data on pharmacist salaries and benefits. The study found that post-BS PharmD pharmacists have a positive marginal rate of return, ranging from 1.73 to 3.96 percent (assuming $10,000 annual earnings by post-BS students). This indicates that those choosing to pursue the post-BS PharmD degree can expect to earn a relatively low IROR compared to other investment opportunities. However, these rates of return only represent monetary benefits. When other nonmonetary benefits are considered, such as job satisfaction, the returns to the PharmD degree are likely to be much higher. Calls for continued study of the IROR within pharmacy are made.