Measuring Efficiency and Effectiveness in the Public Sector

Finn Førsund

No 16/2013, Memorandum from Oslo University, Department of Economics

Abstract: 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.

Keywords: outputs; outcomes; factorially dete rmined multioutput production; Farrell efficiency measures; savings potentials; overall preference effectiveness; output mix effectivenes (search for similar items in EconPapers)
JEL-codes: D24 H40 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2013-07-12
New Economics Papers: this item is included in nep-cse, nep-eff and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Forthcoming as Førsund, Finn R., 'Measuring effectiveness of production in the public sector' in Omega, 2017.

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