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Nonparametric tests of optimizing behavior in public service provision: Methodology and an application to local safety

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Author Info
Cherchye L.
De Borger B.
Van Puyenbroeck T.

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Abstract

We 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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Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2005002.

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Length: 29 pages
Date of creation: Jan 2005
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Handle: RePEc:ant:wpaper:2005002

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  2. Qi Li, 1996. "Nonparametric testing of closeness between two unknown distribution functions," Econometric Reviews, Taylor and Francis Journals, vol. 15(3), pages 261-274. [Downloadable!] (restricted)
  3. Levitt, Steven D, 1997. "Using Electoral Cycles in Police Hiring to Estimate the Effect of Police on Crime," American Economic Review, American Economic Association, vol. 87(3), pages 270-90, June. [Downloadable!] (restricted)
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  4. Drake, Leigh & Simper, Richard, 2002. "X-Efficiency and Scale Economies in Policing: A Comparative Study Using the Distribution Free Approach and DEA," Applied Economics, Taylor and Francis Journals, vol. 34(15), pages 1859-70, October. [Downloadable!] (restricted)
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  8. Ziggy MacDonald, 2002. "Official Crime Statistics: Their Use and Interpretation," Economic Journal, Royal Economic Society, vol. 112(477), pages F85-F106, February. [Downloadable!] (restricted)
  9. Timo Kuosmanen & Laurens Cherchye & Timo Sipiläinen, 2003. "The Law of One Price in Data Envelopment Analysis: Restricting Weight Flexibility Across Firms," Microeconomics 0312006, EconWPA, revised 18 Dec 2003. [Downloadable!]
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  10. Grosskopf, S. & Hayes, K. & Hirschberg, J., 1995. "Fiscal stress and the production of public safety: A distance function approach," Journal of Public Economics, Elsevier, vol. 57(2), pages 277-296, June. [Downloadable!] (restricted)
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  14. Cameron, Samuel, 1988. "The Economics of Crime Deterrence: A Survey of Theory and Evidence," Kyklos, Blackwell Publishing, vol. 41(2), pages 301-23.
  15. Thanassoulis, Emmanuel, 1995. "Assessing police forces in England and Wales using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 87(3), pages 641-657, December. [Downloadable!] (restricted)
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  19. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-98, October. [Downloadable!] (restricted)
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  1. Miguel St. Aubyn, 2008. "Law and Order Efficiency Measurement – A Literature Review," Working Papers 2008/19, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
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