Estimating technical and allocative efficiency in the public sector: A nonparametric analysis of Dutch schools

Abstract

a b s t r a c tPublic sector output provision is influenced not only by discretionary inputs but also by exogenous environmental factors. In this paper, we extended the literature by developing a conditional DEA estimator of allocative efficiency that allows a decomposition of overall cost efficiency into allocative and technical components while simultaneously controlling for the environment. We apply the model to analyze technical and allocative efficiency of Dutch secondary schools. The results reveal that allocative efficiency represents a significant 37 percent of overall cost efficiency on average, although technical inefficiency is still the dominant part. Furthermore, the results show that the impact of environment largely differs between schools and that having a more unfavorable environment is very expensive to schools. These results highlight the importance of including environmental variables in both technical and allocative efficiency analysis.

Efficiency in education: a review of literature and a way forward

“…Gronberg et al (2012) argue persuasively that value-added analysis (which measures changes in student performance from one year to the next) yields better output measures for efficiency analysis than does relying on levels measures of performance. Butler and Monk (1985), Jesson et al (1987), Smith and Mayston (1987), Mayston and Jesson (1988), Beasley (1990), Callan and Santerre (1990), Barrow (1991), McCarty and Yaisawarng (1993), Bonesrønning and Rattsø (1994), Sinuany et al (1994), Beasley (1995), Cubbin and Zamani (1996), (2006a) (2006c) (2008), , Athanassopoulos and Shale (1997), Heshmati and Kumbhakar (1997), Madden et al (1997), Haksever and Muragishi (1998), Kirjavainen and Loikkanen (1998), Ray and Mukherjee (1998), Mancebón and Bandres (1999), Ruggiero and Vitaliano (1999) Houck et al (2010), Kantabutra and Tang (2010), Katharaki and Katharakis (2010), Kempkes and Pohl (2010), Khalili et al (2010), Rayeni and Saljooghi (2010), Sarrico et al (2010), Agasisti (2011b), Kuah and Wong (2011), Thanassoulis et al (2011), Wolszczak-Derlacz and Parteka (2011), Misra et al (2012), Burney et al (2013), Haelermans and Ruggiero (2013), , Lu and Chen (2013), …”

“…Observed in: Bessent and Bessent (1980), Charnes et al (1981), Bessent et al (1982), Diamond and Medewitz (1990), Ray (1991), Deller and Rudnicki (1993), Bonesrønning and Rattsø (1994), Thanassoulis and Dustan (1994), Jimenez and Paqueo (1996), , Kirjavainen and Loikkanen (1998), Mancebón and Bandres (1999), Mancebón and Mar-Molinero (2000), McEwan and Carnoy (2000), Bradley et al (2001) Khalili et al (2010), Naper (2010), Sarrico et al (2010), Agasisti (2011a, Mongan et al (2011, , , , Johnes et al (2012), Kirjavainen (2012), Mancebón et al (2012), Misra et al (2012), Portela et al (2012), Burney et al (2013), Haelermans and Ruggiero (2013), Aristovnik and Obadic (2014), Blackburn et al (2014), Brennan et al (2014). Education system (country or multi-country) levels studies…”

“…If higher, better students' results (2012), , , Johnes et al (2012), Haelermans and Ruggiero (2013), Grosskopf et al (2014).…”

“…Dropout rate Conroy and Arguea (2008), Mancebón et al (2012). Educational resources (books, building, computers, class, bus, grants) Ruggiero et al (1995), Jimenez and Paqueo (1996), , Athanassopoulos and Shale (1997), Cooper and Cohn (1997), Heshmati and Kumbhakar (1997), Ruggiero and Bretschneider (1998), , Thursby (2000), Moreno and Tadepali (2002) (2012), Mancebón et al (2012), Misra et al (2012), Thieme et al (2012) (2013), Haelermans and Ruggiero (2013), Zoghbi et al (2013), Crespo-Cebada et al (2014). Enrollment , Ruggiero and Vitaliano (1999), (2010), Rayeni and Saljooghi (2010), Gronberg et al (2012), Johnes et al (2012), Misra et al (2012), Aristovnik and Obadic (2014), .…”

Operational Research in education

“…DEA and related non-parametric methods continue to be used to derive measures of efficiency in all sectors of education, including: kindergartens and primary schools (Mancebón and Mar Molinero 2000;Burney et al 2013); secondary schools (Bradley et al 2001;Ramanathan 2001;Waldo 2007;Mancebón and Muñiz 2008;Portela and Camanho 2010;Mancebón et al 2012;Portela et al 2012;Haelermans and Ruggiero 2013;Essid et al 2014;Podinovski et al 2014); education administrative areas (Smith and Mayston 1987;Ray 1991;Thanassoulis and Dunstan 1994;Ruggiero et al 1995;Ruggiero 1996;Grosskopf et al 1999;Ruggiero 1999b;Grosskopf and Moutray 2001;Fukuyama and Weber 2002;Rassouli-Currier 2007;Ruggiero 2007;Ouellette and Vierstraete 2010); post-compulsory but pre-higher education (Bradley et al 2010;Johnes et al 2012); and universities (Beasley 1990;Mar Molinero 1996;Giménez and Martínez 2006;Fandel 2007;Dehnokhalaji et al 2010;Thanassoulis et al 2011;Duh et al 2012;Bayraktar et al 2013;De Witte et al 2013). DEA has been used to assess efficiency of individual academic departments or programmes within an institution (Colbert et al 2000;Kao and Liu 2000;…”