| dc.description.abstract | Traditional efficiency measures have two significant drawbacks. Firstly, they fail
to recognise that output is the result of all inputs operating in combination; thus
output per head is a misleading indicator of intrinsic labour productivity. Secondly,
they have often been defined in terms of average levels of performance in least
squares production functions. In practice, average performance norms may
institutionalise some level of inefficiency.
The first of these problems may be overcome in a total-factor view of
efficiency. This implies the extension of traditional ratio measures to include all
inputs and outputs simultaneously. The second requires the comparison of
performance with frontier possibilities. Both of these improvements are embodied in
Data Envelopment Analysis (DEA).
Two applications of DEA are undertaken on U. K. public sector data. The first
of these defines frontier efficiency in local education authorities (LEAs). It develops
an 8 variable model with 3 outputs (based on exam pass rates) and 5 inputs. Four
of the inputs are uncontrollable background variables allowing for differences in
student catchment area; the fifth, teaching expenditure, is under LEA control and
can be targeted. The results suggest that 44 authorities are best-practice and at the
remainder spending per pupil could have been reduced by an average of 6.8%.
These results are replicated on smaller clusters of LEAs to examine the
sensitivity of DEA to the size of the performance comparison. The clustering
procedure produces marked effects on targets, peer groups and the efficiency status
of certain authorities.
A second case study investigates the performance of a sample of 33 prisons
with a high remand population. The model separately identifies the effects of
remand prisoners on costs, and includes separate variables to reflect the levels of
overcrowding and offences. In 1984/85 the combined budget of these prisons was
overspent by 4.6% vis a vis best-practice costs. Using an alternative constant
returns technology this overspend rises to 13.1%.
Two aspects of DEA targets are explored. A model of Leibenstein's inert area
suggests reasons for the persistence of inefficiency and hence that targets may be
unattainable without coercion. Secondly, the literature has justified the
recommendation of DEA targets in their being Pareto efficient. This interpretation is
disputed and an alternative DEA-Dominance criterion is proposed as a more
appropriate basis for targeting. | en_US |
