Costs and Efficiency of Higher Education Institutions in England: A DEA Analysis
As student numbers in the UK's higher education sector have expanded substantially during the last 15 years, it has become increasingly important for government to understand the structure of costs in higher education, thus allowing it to evaluate the potential for expansion and associated cost implications. This study applies Data Envelopment Analysis (DEA) to higher education institutions (HEIs) in England in the period 2000/01-2002/03 to assess the cost structure and the performance of various HEI groups. The paper continues and complements an earlier study by Johnes, Johnes and Thanassoulis (forthcoming), who used parametric regression methods to analyse the same panel data. Interestingly, the DEA analysis provides estimates of subject-specific unit costs that are in the same ballpark as those provided by the parametric methods. We then extend the previous analysis by examining potential cost savings and output augmentations in different HEI groups using several different DEA models. The findings include a suggestion that substantial gains of the order of 20-27% are feasible if all potential savings are directed at raising student numbers so that each HEI exploits to the full not only operating and scale efficiency gains but also adjusts its student mix to maximise student numbers. Finally we use a Malmquist index approach to assess productivity change in UK HEIs. The results reveal that for a majority of HEIs productivity has actually decreased during the study period.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: LANCASTER LA1 4YX|
Phone: +44 (1524) 594601
Fax: +44 (1524) 594244
Web page: http://www.lancaster.ac.uk/lums
More information through EDIRC
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.:
- Timo Kuosmanen & Mika Kortelainen, 2012. "Stochastic non-smooth envelopment of data: semi-parametric frontier estimation subject to shape constraints," Journal of Productivity Analysis, Springer, vol. 38(1), pages 11-28, August.
- Emmanuel Thanssoulis, 1999. "Setting Achievement Targets for School Children," Education Economics, Taylor & Francis Journals, vol. 7(2), pages 101-119.
- Johnes, Jill & Johnes, Geraint, 1995. "Research funding and performance in U.K. University Departments of Economics: A frontier analysis," Economics of Education Review, Elsevier, vol. 14(3), pages 301-314, September.
- Antreas Athanassopoulos & Estelle Shale, 1997. "Assessing the Comparative Efficiency of Higher Education Institutions in the UK by the Means of Data Envelopment Analysis," Education Economics, Taylor & Francis Journals, vol. 5(2), pages 117-134.
- G Johnes & J Johnes, 2005.
"Higher education institutions' costs and efficiency: taking the decomposition a further step,"
574007, Lancaster University Management School, Economics Department.
- Johnes, Geraint & Johnes, Jill, 2009. "Higher education institutions' costs and efficiency: Taking the decomposition a further step," Economics of Education Review, Elsevier, vol. 28(1), pages 107-113, February.
- Tommaso Agasisti & Carlo Salerno, 2007. "Assessing the Cost Efficiency of Italian Universities," Education Economics, Taylor & Francis Journals, vol. 15(4), pages 455-471.
- Philip Andrew Stevens, 2005. "A Stochastic Frontier Analysis of English and Welsh Universities," Education Economics, Taylor & Francis Journals, vol. 13(4), pages 355-374.
- R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
- 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.
- A. T. Flegg & D. O. Allen & K. Field & T. W. Thurlow, 2004. "Measuring the efficiency of British universities: a multi-period data envelopment analysis," Education Economics, Taylor & Francis Journals, vol. 12(3), pages 231-249.
- Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
- Thanassoulis, E., 1996. "A data envelopment analysis approach to clustering operating units for resource allocation purposes," Omega, Elsevier, vol. 24(4), pages 463-476, August.
- 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.
- 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.
- E Thanassoulis & G Johnes & J Johnes, 2005. "An analysis of costs in institutions of higher education in England," Working Papers 566942, Lancaster University Management School, Economics Department.
- Per Andersen & Niels Christian Petersen, 1993. "A Procedure for Ranking Efficient Units in Data Envelopment Analysis," Management Science, INFORMS, vol. 39(10), pages 1261-1264, October.
- Verry, D W & Layard, P R G, 1975. "Cost Functions for University Teaching and Research," Economic Journal, Royal Economic Society, vol. 85(337), pages 55-74, March.
When requesting a correction, please mention this item's handle: RePEc:lan:wpaper:598827. 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: (Giorgio Motta)
If references are entirely missing, you can add them using this form.