Hostname: page-component-78c5997874-m6dg7 Total loading time: 0 Render date: 2024-11-09T01:20:03.031Z Has data issue: false hasContentIssue false

Assessing the Performance of Local Government

Published online by Cambridge University Press:  26 March 2020

Philip Andrew Stevens*
Affiliation:
National Institute of Economic and Social Research

Abstract

We consider the measurement of performance in the public sector in general, focussing on local government and the provision of library services by English local authorities in particular. We will consider two methodologies that assess the performance of local authorities in terms of the efficiency with which they provide services and consider methods that allow us to account for exogenous influences on performance, such as the socio-economic profile of the population served by the authority. We find that although both methods' results appear similar, the implications for potential cost savings vary widely. Omitting to account for background factors leads to an overstatement of the level of inefficiency and hence the scope for reducing expenditure.

Type
Articles
Copyright
Copyright © 2005 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

This paper originates in work undertaken at the Institute on local authority cost effectiveness on behalf of the DETR, DTLR and ODPM. I would like thank Mary O'Mahony, Hiroko Plant, Michela Vecchi, Martin Weale, Willem de Boer and participants at the NIESR conference on ‘Productivity and Performance in the Provision of Public Services’ at the British Academy for help and comments. All mistakes remain the author's own.

References

Aigner, D.J., Lovell, C.A.K. and Schmidt, P. (1977), ‘Formulation and estimation of stochastic frontier production function models’, Journal of Econometrics, 6, pp. 2137.CrossRefGoogle Scholar
Banker, R., Charnes, A., Swarts, J., Cooper, W.W. and Thomas, D.A. (1989), ‘An introduction to data envelopment analysis with some of its models and their uses,Research in Governmental and Nonprofit Accounting, 5, pp. 125163.Google Scholar
Banker, R.D. and Morey, R.C. (1986), ‘Efficiency analysis for exogenously fixed inputs and outputs’, Operations Research, 34(4), pp. 513521.CrossRefGoogle Scholar
Battese, G.E. and Coelli, T.J. (1995), ‘A model for technical efficiency effects in a stochastic frontier production function for panel data’, Empirical Economics, 20, pp. 325332.CrossRefGoogle Scholar
Bessent, A. and Bessent, W. (1980), ‘Determining the comparative efficiency of schools through data envelopment analysis’, Educational Administration Quarterly, 16(2), pp. 5775.CrossRefGoogle Scholar
Bjurek, H., Hjalmarsson, L. and Forsund, F.R. (1990), ‘Deterministic parametric and nonparametric estimation of efficiency in service production: a comparison’, Journal of Econometrics, 46, pp. 213227.CrossRefGoogle Scholar
Chilingerian, J.A. (1995), ‘Evaluating physician efficiency in hospitals: a multivariate analysis of best practices’, European Journal of Operational Research, 80, pp. 548574.CrossRefGoogle Scholar
Coelli, T.J., Rao, D.S.P. and Battese, G.E. (1998), An Introduction to Efficiency and Productivity Analysis, Boston, Kluwer Academic Publishers.CrossRefGoogle Scholar
Coelli, T., Perelman, S. and Romano, E. (1999). ‘Accounting for environmental influences in stochastic frontier models: with application to international airlines’, Journal of Productivity Analysis, 11, pp. 251273.CrossRefGoogle Scholar
Deaton, A. and Muellbauer, J. (1980), Economics and Consumer Behaviour, Cambridge, Cambridge University Press.CrossRefGoogle Scholar
De Borger, B. and Kerstens, K. (1996), ‘Cost efficiency of Belgian local governments: a comparative analysis of FDH, DEA, and econometric approaches’, Regional Science and Urban Economics, 26(2), pp. 145170.CrossRefGoogle Scholar
Ganley, J.A. and Cubbin, J.S. (1992), Public Sector Efficiency Measurement: Applications of Data Envelopment Analysis, Amsterdam, North-Holland.Google Scholar
Huang, C.J. and Liu, J. (1994), ‘Estimation of a non-neutral stochastic frontier production function’, Journal of Productivity Analysis, 5, pp. 171180.CrossRefGoogle Scholar
Jesson, D. and Mayston, D. (1989), ‘Measuring performance in authorities and schools’, in Education and Training UK, Newbury, Berkshire, pp. 1221.Google Scholar
Kumbhakar, S.C., Ghosh, S. and McGuckin, J.T. (1991), ‘A generalized production frontier approach for estimating determinants of inefficiency in U.S. dairy farms’, Journal of Business and Economic Statistics, 9, pp. 249286.Google Scholar
McLean, I. (2005), ‘Correlates of success and local government’, OPSR/ESRC Public Services Programme Seminar, Oxford, 26 April.Google Scholar
Noble, M., Smith, G., Penhale, B., Wright, G., Dibben, C., Owen, T. and Lloyd, M. (2000), ‘Measuring multiple deprivation at the small area level: the indices of deprivation 2000’, Department of the Environment, Transport and the Regions, Regeneration Series, December.Google Scholar
Nunamaker, T. (1985), ‘Using data envelopment analysis to measure the efficiency of non-profit organizations: a critical evaluation’, Managerial and Decision Economics, 6(1), pp. 5058CrossRefGoogle Scholar
O'Mahony, M., Stevens, P.A., Vecchi, M. and Weale, M.R. (2001), ‘Measuring the cost effectiveness of local authorities’, report to the Department for Transport, Local Government and the Regions.Google Scholar
Reifschneider, D. and Stevenson, R. (1991), ‘Systematic departures from the frontier: a framework for the analysis of firm inefficiency’, International Economic Review, 32, pp. 715723.CrossRefGoogle Scholar
Salinas-Jiménez, J. and Smith, P. (1996), ‘Data envelopment analysis applied to quality in primary health care’, Annals of Operations Research, 67, pp. 141161.CrossRefGoogle Scholar
Sexton, T.R., Silkman, R.H. and Hogan, A.J. (1986), ‘Data envelopment analysis: critique and extensions’, New Directions for Program Evaluation, 32, pp. 73105.CrossRefGoogle Scholar
Smith, P. (1997), ‘Model misspecification in data envelopment analysis’, Annals of Operations Research, 73, pp. 233252.CrossRefGoogle Scholar
Smith, P. and Mayston, D. (1987), ‘Measuring efficiency in the public sector’, Omega, 15(3), pp. 181189.CrossRefGoogle Scholar
Stevens, P.A. (2004), ‘Accounting for background variables in stochastic frontier analysis’, NIESR Discussion Paper Number 239.Google Scholar
Stevens, P.A. (2005a), ‘The provision of library services by English local authorities’, NIESR Discussion Paper Number 259.Google Scholar
Stevens, P.A. (2005b), ‘What has the public sector ever done for us?’, Presentation as part of the Economic and Social Research Council's Social Science Week, http://www.niesr.ac.uk/pdf/ssw230605ppt.pdf.Google Scholar
Stone, M. (2002), ‘How not to measure the efficiency of public services (and how one might)’, Journal of the Royal Statistical Society, Series A, 165, pp. 405434.Google Scholar
Vitaliano, D.F. (1997), ‘X-inefficiency in the public sector: the case of libraries’, Public Finance Review, 25.6, pp. 629643.CrossRefGoogle Scholar
Vitaliano, D.F. (1998), ‘Assessing public library efficiency using data envelopment analysis’, Annals of Public and Cooperative Economics, 69(1), pp. 107122.CrossRefGoogle Scholar
Wang, H-J. and Schmidt, (2002), ‘One-step and two-step estimation of the effects of exogenous variables on technical efficiency levels’, Journal of Productivity Analysis, 18(2), pp. 129144.CrossRefGoogle Scholar
Worthington, A.C. (1999), ‘Performance indicators and efficiency measurement in public libraries’, Australian Economic Review, 32, pp. 3142.CrossRefGoogle Scholar
Worthington, A.C. and Dollery, B.E. (2000), ‘Efficiency measurement in the local public sector: econometric and mathematical programming frontier techniques’, Discussion Papers in Economics, Finance and International Competitiveness No. 78, Queensland University of Technology, 121.Google Scholar