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Measuring Efficiency and Effectiveness in the Public Sector


  • Førsund, Finn R.

    () (Dept. of Economics, University of Oslo)


The distinction between the concepts outputs and outcomes can be made operational based on the consideration of the degree of control a public service producer has over its production activity. Resources are transformed into service outputs under the control of the organisation in question, while outcomes represent some higher social goals than outputs and are determined by the outputs and other exogenous variables, but the production of outcomes is outside the control of the organisation. The link to the calculation of savings potentials and efficiency measurement is provided based on introducing the concept of a benchmark frontier technology for the type of production in question. A new measure of overall preference efficiency is introduced and its decomposition into output-oriented technical efficiency and output mix efficiency is shown. The rather monumental task of providing the necessary information for calculating mix efficiency is highlighted.

Suggested Citation

  • Førsund, Finn R., 2013. "Measuring Efficiency and Effectiveness in the Public Sector," Memorandum 16/2013, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2013_016

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    References listed on IDEAS

    1. Boaz Golany & Eran Tamir, 1995. "Evaluating Efficiency-Effectiveness-Equality Trade-Offs: A Data Envelopment Analysis Approach," Management Science, INFORMS, vol. 41(7), pages 1172-1184, July.
    2. Ruggiero, John, 1996. "Efficiency of Educational Production: An Analysis of New York School Districts," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 499-509, August.
    3. Finn Førsund & Nikias Sarafoglou, 2002. "On the Origins of Data Envelopment Analysis," Journal of Productivity Analysis, Springer, vol. 17(1), pages 23-40, January.
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    Cited by:

    1. Hanson, Torbjørn, 2016. "Estimating output mix effectiveness: A scenario approach," Memorandum 14/2016, Oslo University, Department of Economics.

    More about this item


    outputs; outcomes; factorially dete rmined multioutput production; Farrell efficiency measures; savings potentials; overall preference effectiveness; output mix effectivenes;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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