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Higher education institutions' costs and efficiency: taking the decomposition a further step

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  • G Johnes
  • J Johnes

Abstract

A multiproduct cost function is estimated for English higher education institutions using a panel of data from recent years. The panel approach allows estimation by means of a random parameter stochastic frontier model which provides considerable new insights in that it allows the impact on costs of inter-institutional differences in the cost function itself to be distinguished from inter-institutional differences in efficiency. The approach used here therefore resembles in some respects the non-parametric methods of efficiency evaluation. We report also on measures of average incremental cost of provision and on returns to scale and scope.

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Bibliographic Info

Paper provided by Lancaster University Management School, Economics Department in its series Working Papers with number 574007.

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Date of creation: 2005
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Handle: RePEc:lan:wpaper:574007

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References

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  1. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  2. Geraint Johnes, . "Multi-Product Cost Functions and the Funding of Tuition in UK Universities," Working Papers ec6/94, Department of Economics, University of Lancaster.
  3. Geraint Johnes, 2004. "A Fourth Desideratum: The CES Cost Function and the Sustainable Configuration of Multiproduct Firms," Bulletin of Economic Research, Wiley Blackwell, vol. 56(4), pages 329-332, October.
  4. Ray Barrell, 1999. "Labour productivity and convergence within Europe: East German and Irish experience," NIESR Discussion Papers 185, National Institute of Economic and Social Research.
  5. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June.
  6. Cohn, Elchanan & Rhine, Sherrie L W & Santos, Maria C, 1989. "Institutions of Higher Education as Multi-product Firms: Economies of Scale and Scope," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 284-90, May.
  7. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
  8. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  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. Cooper, Samuel T. & Cohn, Elchanan, 1997. "Estimation of a frontier production function for the South Carolina educational process," Economics of Education Review, Elsevier, vol. 16(3), pages 313-327, June.
  11. Efthymios G. Tsionas, 2002. "Stochastic frontier models with random coefficients," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(2), pages 127-147.
  12. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
  13. 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.
  14. Steven B. Caudill, 2003. "Estimating a mixture of stochastic frontier regression models via the em algorithm: A multiproduct cost function application," Empirical Economics, Springer, vol. 28(3), pages 581-598, July.
  15. Johnes, Geraint, 1997. "Costs and Industrial Structure in Contemporary British Higher Education," Economic Journal, Royal Economic Society, vol. 107(442), pages 727-37, May.
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Citations

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Cited by:
  1. Haelermans, Carla & Ruggiero, John, 2013. "Estimating technical and allocative efficiency in the public sector: A nonparametric analysis of Dutch schools," European Journal of Operational Research, Elsevier, vol. 227(1), pages 174-181.
  2. repec:lan:wpaper:4381 is not listed on IDEAS
  3. repec:lan:wpaper:1031 is not listed on IDEAS
  4. G Johnes, 2005. "Funding formulae where costs legitimately differ: the case of higher education in England," Working Papers 574022, Lancaster University Management School, Economics Department.
  5. E Thanassoulis & M Kortelainen & G Johnes & J Johnes, 2009. "Costs and Efficiency of Higher Education Institutions in England: A DEA Analysis," Working Papers 598827, Lancaster University Management School, Economics Department.
  6. G. Thomas Sav, 2012. "Stochastic Cost Inefficiency Estimates and Rankings of Public and Private Research and Doctoral Granting Universities," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 2(3), pages 13, June.
  7. Javier García-Estévez & Néstor Duch-Brown, 2012. "Student graduation: to what extent does university expenditure matter?," Working Papers 2012/4, Institut d'Economia de Barcelona (IEB).
  8. Erkoc, Taptuk Emre, 2013. "Estimating Economic Efficiencies of Public Sector Organisations with Stochastic Frontier Analysis: Evidence from Turkish Higher Education," MPRA Paper 54101, University Library of Munich, Germany.
  9. T Agasisti & G Johnes, 2009. "Cost Structure, Efficiency and Heterogeneity in US Higher Education: An Empirical Analysis," Working Papers 599308, Lancaster University Management School, Economics Department.
  10. repec:lan:wpaper:4509 is not listed on IDEAS
  11. repec:lan:wpaper:4792 is not listed on IDEAS
  12. Haelermans, Carla & De Witte, Kristof & Blank, Jos L.T., 2012. "On the allocation of resources for secondary schools," Economics of Education Review, Elsevier, vol. 31(5), pages 575-586.
  13. repec:lan:wpaper:4813 is not listed on IDEAS
  14. Tanja Kirjavainen, 2007. "Efficiency of Finnish Upper Secondary Schools: An Application of Stochastic Frontier Analysis with Panel Data," Discussion Papers 428, Government Institute for Economic Research Finland (VATT).
  15. Massimo Filippini & Martin Koller, 2012. "Cost Efficiency Measurement in Postal Delivery Networks," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 1206, USI Università della Svizzera italiana.

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