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Measuring the efficiency of public services: the limits of analysis

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  • Peter C. Smith
  • Andrew Street

Abstract

Policy makers are increasingly seeking to develop overall measures of the effi-ciency of public service organizations. For that, the use of 'off-the-shelf' statistical tools such as data envelopment analysis and stochastic frontier analysis have been advocated as tools to measure organizational efficiency. The analytical sophistication of such methods has reached an advanced stage of development. We discuss the context within which such models are deployed, their underlying assumptions and their usefulness for a regulator of public services. Four specific model building issues are discussed: the weights that are attached to public service outputs; the specification of the statistical model; the treatment of environmental influences on performance; the treatment of dynamic effects. The paper concludes with recommendations for policy makers and researchers on the development and use of efficiency measurement techniques. Copyright 2005 Royal Statistical Society.

Suggested Citation

  • Peter C. Smith & Andrew Street, 2005. "Measuring the efficiency of public services: the limits of analysis," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(2), pages 401-417.
  • Handle: RePEc:bla:jorssa:v:168:y:2005:i:2:p:401-417
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    Cited by:

    1. Sharon Hadad & Yossi Hadad & Tzahit Simon-Tuval, 2013. "Determinants of healthcare system’s efficiency in OECD countries," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(2), pages 253-265, April.
    2. Troels Kristensen & Peter Bogetoft & Kjeld Pedersen, 2010. "Potential gains from hospital mergers in Denmark," Health Care Management Science, Springer, vol. 13(4), pages 334-345, December.
    3. Laudicella, Mauro & Olsen, Kim Rose & Street, Andrew, 2010. "Examining cost variation across hospital departments-a two-stage multi-level approach using patient-level data," Social Science & Medicine, Elsevier, vol. 71(10), pages 1872-1881, November.
    4. Adriana Castelli & Andrew Street & Rossella Verzulli & Padraic Ward, 2015. "Examining variations in hospital productivity in the English NHS," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(3), pages 243-254, April.
    5. Helen Simpson, 2009. "Productivity In Public Services," Journal of Economic Surveys, Wiley Blackwell, vol. 23(2), pages 250-276, April.
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    7. Ricardo AGUADO & Jabier MARTINEZ & Miguel Angel LARRINAGA, 2011. "REGIONAL R&D&i PRODUCTIVITY IN EUROPE. IDENTIFYING REGIONAL TYPOLOGIES AND POLICY RECOMMENDATIONS," ERSA conference papers ersa10p412, European Regional Science Association.
    8. Bruce Hollingsworth & Andrew Street, 2006. "The market for efficiency analysis of health care organisations," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1055-1059.
    9. Vitikainen, Kirsi & Street, Andrew & Linna, Miika, 2009. "Estimation of hospital efficiency--Do different definitions and casemix measures for hospital output affect the results?," Health Policy, Elsevier, vol. 89(2), pages 149-159, February.
    10. Kim-Huong Nguyen & Tim Coelli, 2009. "Quantifying the effects of modelling choices on hospital efficiency measures: A meta-regression analysis," CEPA Working Papers Series WP072009, School of Economics, University of Queensland, Australia.
    11. Oleg Badunenko & Daniel J. Henderson & Subal C. Kumbhakar, 2012. "When, where and how to perform efficiency estimation," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 175(4), pages 863-892, October.
    12. repec:kap:atlecj:v:45:y:2017:i:2:d:10.1007_s11293-017-9542-x is not listed on IDEAS
    13. Amir B. Ferreira Neto & Joshua Hall, 2017. "Economies of Scale and Governance of Library Systems: Evidence from West Virginia," Working Papers 17-13, Department of Economics, West Virginia University.
    14. Laureti, Tiziana & Secondi, Luca & Biggeri, Luigi, 2014. "Measuring the efficiency of teaching activities in Italian universities: An information theoretic approach," Economics of Education Review, Elsevier, vol. 42(C), pages 147-164.
    15. Sung, Bongsuk & Song, Woo-Yong, 2014. "How government policies affect the export dynamics of renewable energy technologies: A subsectoral analysis," Energy, Elsevier, vol. 69(C), pages 843-859.
    16. William Prieto Bustos & Carlos Alberto Barreto Nieto & Henry Antonio Mendoza, 2012. "Eficiencia Técnica Del Sector Público," DOCUMENTOS DE TRABAJO UCATOLICA 010351, UNIVERSIDAD CATOLICA DE COLOMBIA.
    17. John Buckell & Andrew Smith & Roberta Longo & David Holland, 2013. "Health inefficiency and unobservable heterogeneity - empirical evidence from pathology services in the UK National Health Service," Working Papers 1307, Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds.
    18. repec:gam:jsusta:v:9:y:2017:i:9:p:1549-:d:110864 is not listed on IDEAS
    19. Zuzana Kučerová, 2012. "Measuring of Efficiency in the Public and Private Sector - Current Research Approaches," Český finanční a účetní časopis, University of Economics, Prague, vol. 2012(2), pages 110-125.
    20. Roberto Ippoliti, 2015. "La riforma della geografia giudiziaria: efficienza tecnica e domanda di giustizia," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2015(2), pages 91-124.
    21. Hauck, Katharina & Street, Andrew, 2006. "Performance assessment in the context of multiple objectives: A multivariate multilevel analysis," Journal of Health Economics, Elsevier, vol. 25(6), pages 1029-1048, November.
    22. Nicholas Longford & D. B. Rubin, 2006. "Performance assessment and league tables. Comparing like with like," Economics Working Papers 994, Department of Economics and Business, Universitat Pompeu Fabra.
    23. Alexandre Marinho & Simone de Souza Cardoso & Vivian Vicente de Almeida, 2009. "Brasil e OCDE: Avaliação da Eficiência em Sistemas de Saúde," Discussion Papers 1370, Instituto de Pesquisa Econômica Aplicada - IPEA.
    24. Collier, Trevor & Johnson, Andrew L. & Ruggiero, John, 2011. "Technical efficiency estimation with multiple inputs and multiple outputs using regression analysis," European Journal of Operational Research, Elsevier, vol. 208(2), pages 153-160, January.

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