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Assessing The Performance Of The Public Sector


  • Pierre Pestieau


One is used to hearing harsh statements about inefficient public services. It is not surprising to see public sector performance questioned. What is surprising is that what is meant by performance, and how it is measured, does not seem to matter much to either the critics or the advocates of the public sector. The purpose of this paper is to suggest a definition, and a way to measure the performance of the public sector or rather of its main components. Our approach is explicitly rooted in the principles of welfare and production economics. We will proceed in four stages. First of all we present what we call the 'performance approach' to the public sector. This concept rests on the principal-agent relation that links a principal, i.e., the State, and an agent, i.e., the person in charge of the public sector unit, and on the definition of performance as the extent to which the agent fulfils the objectives assigned by the principal. The performance is then measured by using the notion of productive efficiency and the 'best practice' frontier technique. In the second stage we move to the issue of measuring the performance of some canonical components of the public sector (education, health care and railways transport), assuming that there is no constraint as to data availability. The idea is to disentangle the usual confusion between conceptual and data problems. In the third stage, we move to real world data problems. The question is then given the available data, whether it makes sense to assess and measure the performance of such public sector activities. The final stage is devoted to explaining performance or rather lack thereof. This exercise has clear implications for public policy. Finally we argue that when the scope is not components but the entirety of the public sector, one should restrict the performance analysis to outcomes and not relate them to inputs. Copyright © 2009 The Author Journal compilation © CIRIEC 2009.

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  • Pierre Pestieau, 2009. "Assessing The Performance Of The Public Sector," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(1), pages 133-161, March.
  • Handle: RePEc:bla:annpce:v:80:y:2009:i:1:p:133-161

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    References listed on IDEAS

    1. Gathon, H. -J. & Pestieau, P., 1995. "Decomposing efficiency into its managerial and its regulatory components: The case of European railways," European Journal of Operational Research, Elsevier, vol. 80(3), pages 500-507, February.
    2. Bernadette Biatour & Mathieu Lefebvre & Sergio Pereleman & Pierre Pestieau, 2005. "Faut-il un ou plusieurs indicateurs d'exclusion sociale?," CREPP Working Papers 0503, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
    3. van Doorslaer, Eddy & Wagstaff, Adam & Bleichrodt, Han & Calonge, Samuel & Gerdtham, Ulf-G. & Gerfin, Michael & Geurts, Jose & Gross, Lorna & Hakkinen, Unto & Leu, Robert E., 1997. "Income-related inequalities in health: some international comparisons," Journal of Health Economics, Elsevier, vol. 16(1), pages 93-112, February.
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    Cited by:

    1. Onrubia-Fernández, Jorge & Fuentes, Antonio Jesús, 2017. "How costly are public sector inefficiencies? A theoretical framework for rationalising fiscal consolidations," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 11, pages 1-19.
    2. Lefebvre, M. & Perelman, S. & Pestieau, P., 2015. "Productivity and performance in the public sector," CORE Discussion Papers 2015052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Oliver Tiemann & Jonas Schreyögg, 2012. "Changes in hospital efficiency after privatization," Health Care Management Science, Springer, vol. 15(4), pages 310-326, December.
    4. Anna Montén & Christian Thater, 2011. "Determinants of Efficiency in Child-Care Provision," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 67(4), pages 378-403, December.
    5. Ludovico Carrino, 2016. "Data Versus Survey-based Normalisation in a Multidimensional Analysis of Social Inclusion," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 2(3), pages 305-345, November.
    6. Jorge Onrubia-Fernández & A. Jesús Sánchez-Fuentes, 2014. "How costly are the public sector ineffiencies? An integrated theoretical framework for its welfare assessment," Working Papers. Collection A: Public economics, governance and decentralization 1407, Universidade de Vigo, GEN - Governance and Economics research Network.
    7. Cahill, Catríona & Palcic, Dónal & Reeves, Eoin, 2017. "Commercialisation and airport performance: The case of Ireland's DAA," Journal of Air Transport Management, Elsevier, vol. 59(C), pages 155-163.
    8. Peeters, Marga, 2011. "Demographic pressure, excess labour supply and public-private sector employment in Egypt - Modelling labour supply to analyse the response of unemployment, public finances and welfare," MPRA Paper 31101, University Library of Munich, Germany.
    9. George Economides & Apostolis Philippopoulos & Petros Varthalitis, 2015. "Incentives to Work and Performance in the Public Sector," CESifo Working Paper Series 5193, CESifo Group Munich.
    10. Economides, George & Philippopoulos, Apostolis & Vassilatos, Vanghelis, 2014. "Public, or private, providers of public goods? A dynamic general equilibrium study," European Journal of Political Economy, Elsevier, vol. 36(C), pages 303-327.
    11. Tiemann, Oliver & Schreyögg, Jonas & Busse, Reinhard, 2012. "Hospital ownership and efficiency: A review of studies with particular focus on Germany," Health Policy, Elsevier, vol. 104(2), pages 163-171.
    12. Mande Buafua, Patrick, 2015. "Efficiency of urban water supply in Sub-Saharan Africa: Do organization and regulation matter?," Utilities Policy, Elsevier, vol. 37(C), pages 13-22.
    13. José Cordero Ferrera & Eva Cebada & Luis Murillo Zamorano, 2014. "The effect of quality and socio-demographic variables on efficiency measures in primary health care," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(3), pages 289-302, April.
    14. Iparraguirre, José Luis & Ma, Ruosi, 2015. "Efficiency in the provision of social care for older people. A three-stage Data Envelopment Analysis using self-reported quality of life," Socio-Economic Planning Sciences, Elsevier, vol. 49(C), pages 33-46.
    15. Carolin Fritzsche, 2018. "Analyzing the Efficiency of County Road Provision - Evidence from Eastern German Counties," ifo Working Paper Series 249, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    16. Gerlinde Verbist & Wim Van Lancker, 2016. "Horizontal and Vertical Equity Objectives of Child Benefit Systems: An Empirical Assessment for European Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(3), pages 1299-1318, September.

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