Nonparametric tests of optimizing behavior in public service provision: Methodology and an application to local safety
AbstractWe develop a positive non-parametric model of public sector production that allows us to test whether an implicit procedure of cost minimization at shadow prices can rationalize the outcomes of public sector activities. The basic model focuses on multiple C-outputs and does not imply any explicit or implicit assumption regarding the trade-offs between the different inputs (in terms of relative shadow prices) or outputs (in terms of relative valuation). The proposed methodology is applied to a cross-section sample of 546 Belgian municipal police forces. Drawing on detailed task-allocation data and controlling, among others, for the presence of state police forces, the cost minimization hypothesis is found to provide a good fit of the data. Imposing additional structure on output valuation, derived from available ordinal information, yields equally convincing goodness-of-fit results. By contrast, we find that aggregating the labor input over task specializations, a common practice in efficiency assessments of police departments, entails a significantly worse fit of the data.
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Bibliographic InfoPaper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2005002.
Length: 29 pages
Date of creation: Jan 2005
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Other versions of this item:
- Laurens Cherchye & Bruno De Borger & Tom Van Puyenbroeck, 2004. "Nonparametric tests of optimizing behavior in public service provision: Methodology and an application to local safety," Public Economics Working Paper Series ces0416, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-01 (All new papers)
- NEP-ECM-2005-02-01 (Econometrics)
- NEP-EFF-2005-02-01 (Efficiency & Productivity)
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