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An analysis of costs in institutions of higher education in England

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  • E Thanassoulis
  • G Johnes
  • J Johnes

Abstract

Cost functions are estimated, using both random effects and stochastic frontier methods, for institutions of higher education in England. The paper advances on the existing literature by employing finer disaggregation by subject, institution type, and location, and by introducing consideration of quality effects. The findings are that, amongst undergraduates, medical students are the most costly, and non-science students the least; amongst postgraduates, those on taught courses are costly, while research students are relatively inexpensive. Provision in London is found to be more costly than that elsewhere. Estimates of economies of scale and economies of scope vary according to the choice of estimating technique. The random effects model suggests that ray economies of scale and economies of scope are ubiquitous. The stochastic frontier model suggests some product-specific economies of scale in research, but diseconomies elsewhere, and product specific economies of scope in undergraduate science, but diseconomies elsewhere. This has implications for achieving any expansion in higher education.

Suggested Citation

  • E Thanassoulis & G Johnes & J Johnes, 2005. "An analysis of costs in institutions of higher education in England," Working Papers 566942, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:566942
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    References listed on IDEAS

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    1. Philip Andrew Stevens, 2005. "A Stochastic Frontier Analysis of English and Welsh Universities," Education Economics, Taylor & Francis Journals, vol. 13(4), pages 355-374.
    2. Izadi, Hooshang & Johnes, Geraint & Oskrochi, Reza & Crouchley, Robert, 2002. "Stochastic frontier estimation of a CES cost function: the case of higher education in Britain," Economics of Education Review, Elsevier, vol. 21(1), pages 63-71, February.
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    8. Johnes, Geraint, 1997. "Costs and Industrial Structure in Contemporary British Higher Education," Economic Journal, Royal Economic Society, vol. 107(442), pages 727-737, May.
    9. Glass, J C & McKillop, Donal G & Hyndman, N, 1995. "Efficiency in the Provision of University Teaching and Research: An Empirical Analysis of UK Universities," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(1), pages 61-72, Jan.-Marc.
    10. Geraint Johnes, 1999. "The Management of Universities; Scottish Economic Society/Royal Bank of Scotland Annual Lecture, 1999," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(5), pages 505-522, November.
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    Cited by:

    1. E Thanassoulis & M Kortelainen & G Johnes & J Johnes, 2011. "Costs and efficiency of higher education institutions in England: a DEA analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(7), pages 1282-1297, July.
    2. Brandt, Tasso & Schubert, Torben, 2012. "Is the University Model an Organizational Necessity? Scale and Agglomeration Effects in Science," Papers in Innovation Studies 2012/1, Lund University, CIRCLE - Centre for Innovation Research.

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