Advanced Search
MyIDEAS: Login

Measuring local government technical (in)efficiency: An application and comparison of FDH, DEA and econometric approaches

Contents:

Author Info

  • Geys, Benny
  • Moesen, Wim

Abstract

Economic efficiency – understood in terms of jurisdictions providing a maximum amount of output for a given level of inputs – is one potential means to evaluate public policies. Various approaches, however, co-exist to measure the (technical) efficiency of organizations. Given that these rely on different underlying assumptions, it is important to assess whether, and to what extent, the approach taken affects the outcome of efficiency studies. The present paper employs a dataset of local governments in Flanders in 2000 to compare the three common approaches to measure (in)efficiency (i.c. FDH, DEA and econometric techniques). Our results indicate that the methodological choices of instrumentation have a substantial effect on analytic performance measurement. Hence, assessing the robustness of the results across various approaches to efficiency measurement is crucial to avoid incorrect inferences. -- Ökonomische Effizienz – verstanden im Sinne der Maximierung der Ausbringungsmenge für ein gegebenes Inputlevel – ist ein gängiges Mittel um staatliche Politiken zu evaluieren. Allerdings existieren mehrere Herangehensweisen, um die (technische) Effizienz von Organisationen zu messen. Unter der Voraussetzung, dass diese auf unterschiedlichen Annahmen basieren, ist es von Interesse, ob und inwiefern die gewählte Methode die Ergebnisse einer Untersuchung beeinflusst. Mit dem Datenmaterial aus flämischen Gemeindeverwaltungen im Jahr 2000 vergleichen wir die drei bedeutendsten Methoden der (In-)Effizienzmessung (FDH, DEH und ökonometrische Verfahren). Unsere Ergebnisse zeigen, dass die Wahl der Methode einen substantiellen Einfluss auf die Performancemessung hat. Aus diesem Grunde erscheint es mitunter unerlässlich, die Robustheit von Ergebnissen anhand verschiedener Effizienzmethoden zu überprüfen, um nicht Gefahr zu laufen, unzulässige Folgerungen zu ziehen.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://econstor.eu/bitstream/10419/54663/1/620009098.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number SP II 2008-21.

as in new window
Length:
Date of creation: 2008
Date of revision:
Handle: RePEc:zbw:wzbmpg:200821

Contact details of provider:
Postal: Reichpietschufer 50, 10785 Berlin
Phone: +49 (0)30 25491-402
Fax: +49 (0)30 25491-400
Email:
Web page: http://www.wzb.eu/
More information through EDIRC

Related research

Keywords: free disposal hull; data envelopment analysis; stochastic frontiers; government (in)efficiency; Flemish municipalities;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Geys, Benny, 2006. "Looking across borders: A test of spatial policy interdependence using local government efficiency ratings," Journal of Urban Economics, Elsevier, vol. 60(3), pages 443-462, November.
  2. 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.
  3. Jean Hindriks & François Gerard, 2005. "Le palmarès des villes et communes en Wallonie : une approche en termes d'efficacité," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 35, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  4. 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.
  5. Laurens Cherchye & Frederic Vermeulen, 2004. "Robust rankings of multi-dimensional performances: An application to Tour de France racing cyclists," Public Economics Working Paper Series wptourf, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
  6. Shunxiang Wu & Stephen Devadoss & Yaochi Lu, 2003. "Estimation and decomposition of technical efficiency for sugarbeet farms," Applied Economics, Taylor & Francis Journals, vol. 35(4), pages 471-484.
  7. Andrew Worthington & Brian Dollery, 2002. "Incorporating contextual information in public sector efficiency analyses: a comparative study of NSW local government," Applied Economics, Taylor & Francis Journals, vol. 34(4), pages 453-464.
  8. De Borger, Bruno & Kerstens, Kristiaan, 1996. "Cost efficiency of Belgian local governments: A comparative analysis of FDH, DEA, and econometric approaches," Regional Science and Urban Economics, Elsevier, vol. 26(2), pages 145-170, April.
  9. Geys, Benny & Heinemann, Friedrich & Kalb, Alexander, 2007. "Local Governments in the Wake of Demographic Change: Efficiency and Economies of Scale in German Municipalities," ZEW Discussion Papers 07-036, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Paul W. Bauer, 1987. "A technique for estimating a cost system that allows for inefficiency," Working Paper 8704, Federal Reserve Bank of Cleveland.
  11. Pierre-Guillaume Méon & Laurent Weill, 2005. "Does better governance foster efficiency? An aggregate frontier analysis," ULB Institutional Repository 2013/8368, ULB -- Universite Libre de Bruxelles.
  12. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
  13. De Borger, B, et al, 1994. " Explaining Differences in Productive Efficiency: An Application to Belgian Municipalities," Public Choice, Springer, vol. 80(3-4), pages 339-58, September.
  14. David Hauner, 2005. "Explaining efficiency differences among large German and Austrian banks," Applied Economics, Taylor & Francis Journals, vol. 37(9), pages 969-980.
  15. Paul W. Bauer & Allen N. Berger & Gary D. Ferrier & David B. Humphrey, 1997. "Consistency conditions for regulatory analysis of financial institutions: a comparison of frontier efficiency methods," Finance and Economics Discussion Series 1997-50, Board of Governors of the Federal Reserve System (U.S.).
  16. von Hirschhausen, Christian R. & Cullmann, Astrid, 2005. "Efficiency Analysis of German Electricity Distribution Utilities : Non-Parametric and Parametric Tests," Dresden Discussion Paper Series in Economics 06/05, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  17. Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 1993. "The Measurement of Productive Efficiency: Techniques and Applications," OUP Catalogue, Oxford University Press, number 9780195072181.
  18. Alt, James E. & Lassen, David Dreyer, 2006. "Fiscal transparency, political parties, and debt in OECD countries," European Economic Review, Elsevier, vol. 50(6), pages 1403-1439, August.
  19. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
  20. Lars-Erik Borge & Torberg Falch & Per Tovmo, 2007. "Public Sector Efficiency: The Roles of Political and Budgetary Institutions, Fiscal Capacity and Democratic Participation," Working Paper Series 8407, Department of Economics, Norwegian University of Science and Technology.
  21. J. David Cummins & Hongmin Zi, 1997. "Comparison of Frontier Efficiency Methods: An Application to the U.S. Life Insurance Industry," Center for Financial Institutions Working Papers 97-03, Wharton School Center for Financial Institutions, University of Pennsylvania.
  22. Hasenkamp, Georg, 1976. "A study of multiple-output production functions : Klein's railroad study revisited," Journal of Econometrics, Elsevier, vol. 4(3), pages 253-262, August.
  23. Erik Mathijs & Johan F. M. Swinnen, 2001. "Production Organization And Efficiency During Transition: An Empirical Analysis Of East German Agriculture," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 100-107, February.
  24. Jan Vermeir & Bruno Heyndels, 2006. "Tax policy and yardstick voting in Flemish municipal elections," Applied Economics, Taylor & Francis Journals, vol. 38(19), pages 2285-2298.
  25. Jorid Kalseth & Jørn Rattsø, 1998. "Political Control of Administrative Spending: The Case of Local Governments in Norway," Economics and Politics, Wiley Blackwell, vol. 10(1), pages 63-83, 03.
  26. Balaguer-Coll, Maria Teresa & Prior, Diego & Tortosa-Ausina, Emili, 2007. "On the determinants of local government performance: A two-stage nonparametric approach," European Economic Review, Elsevier, vol. 51(2), pages 425-451, February.
  27. Laurens Cherchye & Timo Kuosmanen & Thierry Post, 2000. "What Is the Economic Meaning of FDH? A Reply to Thrall," Journal of Productivity Analysis, Springer, vol. 13(3), pages 263-267, May.
  28. Kelvin Balcombe & Iain Fraser & Jae Kim, 2006. "Estimating technical efficiency of Australian dairy farms using alternative frontier methodologies," Applied Economics, Taylor & Francis Journals, vol. 38(19), pages 2221-2236.
  29. María Teresa Balaguer-Coll & Diego Prior & José Manuel Vela-Bargues, 2002. "Efficiency and quality in local government management. The case of spanish local authorities," Working Paper 200202, Department of Business Economics, Universitat Autonoma de Barcelona.
  30. Matthias Staat, 2006. "Efficiency of hospitals in Germany: a DEA-bootstrap approach," Applied Economics, Taylor & Francis Journals, vol. 38(19), pages 2255-2263.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Geys, Benny & Heinemann, Friedrich & Kalb, Alexander, 2009. "Voter involvement, fiscal autonomy and public sector efficiency: evidence from German municipalities," Discussion Papers, Research Unit: Market Processes and Governance SP II 2009-02, Social Science Research Center Berlin (WZB).
  2. Geys, Benny & Heinemann, Friedrich & Kalb, Alexander, 2007. "Local Governments in the Wake of Demographic Change: Efficiency and Economies of Scale in German Municipalities," ZEW Discussion Papers 07-036, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:zbw:wzbmpg:200821. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.