Kristof De Witte

Designing performance incentives, an international benchmark study in the water sector

Cross-country comparisons avoid the unsteady equilibrium in which regulators have to balance between economies of scale and a sufficient number of remaining comparable utilities. By the use of data envelopment analysis, we compare the efficiency of the drinking water sector in the Netherlands, England and Wales, Australia, Portugal and Belgium. After introducing a procedure to measure the homogeneity of an industry, robust order-m partial frontiers are used to detect outlying observations. By applying bootstrapping algorithms, bias-corrected first and second stage results are estimated. Our results suggest that incentive regulation in the sense of regulatory and benchmark incentive schemes have a significant positive effect on efficiency. By suitably adapting the conditional efficiency measures of Daraio and Simar (Advanced robust and nonparametric methods in efficiency analysis. Springer, New York 2007) to the bias corrected estimates of Simar and Wilson (Manage Sci, 44(1): 49–61, 1998), we incorporate environmental variables directly into the efficiency estimates. We firstly equalize the social, physical and institutional environment, and secondly, deduce the effect of incentive schemes on utilities as they would work under similar conditions. The analysis demonstrates that in absence of clear and structural incentives the average efficiency of the utilities falls in comparison with utilities which are encouraged by incentives.

Capturing the Environment: A Metafrontier Approach to the Drinking Water Sector

Environmental factors add complexity to the comparison between specific activities or entire entities. Decision making units with an inferior performance are tempted to invoke that their organization is different from the others in the data set. By reinterpreting and extending the metafrontier literature, we propose an all-embracing concept to fully capture the operational environment. We suggest the ‘Group Specific Technical Efficiency’ as a new measure to assess the overall efficiency of a utility while allowing for environmental differences. A real-world example of drinking water utilies out of 5 different countries illustrates the concept.

Efficiency in education: a review of literature and a way forward

This paper provides an extensive overview of the literature on efficiency in education. It summarizes the earlier applied inputs, outputs and contextual variables, as well as the used data sources of papers in the field of efficiency in education. Moreover, it reviews the papers on education that applied methodologies as data envelopment analysis, Malmquist index, Bootstrapping, robust frontiers, metafrontier or stochastic frontier analysis. Based on the insights of the literature review, a second part of the paper provides some ways forward. It attempts to establish a link between the parametric ‘economics of education’ literature and the (semi-parametric) ‘efficiency in education literature’. We point to the similarities between matching and conditional efficiency; difference-in-differences and metafrontiers; and quantile regressions and partial frontiers. The paper concludes with some practical directions for prospective researchers in the field.

Blaming the Exogenous Environment? Conditional Efficiency Estimation with Continuous and Discrete Environmental Variables

This paper proposes a fully nonparametric framework to estimate relative efficiency of entities while accounting for a mixed set of continuous and discrete (both ordered and unordered) exogenous variables. Using robust partial frontier techniques, the probabilistic and conditional characterization of the production process, as well as insights from the recent developments in nonparametric econometrics, we present a generalized approach for conditional efficiency measurement. To do so, we utilize a tailored mixed kernel function with a data-driven bandwidth selection. So far only descriptive analysis for studying the effect of heterogeneity in conditional efficiency estimation has been suggested. We show how to use and interpret nonparametric bootstrap-based significance tests in a generalized conditional efficiency framework. This allows us to study statistical significance of continuous and discrete environmental variables. The proposed approach is illustrated by a sample of British pupils from the OECD Pisa data set. The results show that several exogenous discrete factors have a significant effect on the educational process.

To publish or not to publish? On the aggregation and drivers of research performance

This paper presents a methodology to aggregate multidimensional research output. Using a tailored version of the non-parametric Data Envelopment Analysis model, we account for the large heterogeneity in research output and the individual researcher preferences by endogenously weighting the various output dimensions. The approach offers three important advantages compared to the traditional approaches: (1) flexibility in the aggregation of different research outputs into an overall evaluation score; (2) a reduction of the impact of measurement errors and a-typical observations; and (3) a correction for the influences of a wide variety of factors outside the evaluated researcher’s control. As a result, research evaluations are more effective representations of actual research performance. The methodology is illustrated on a data set of all faculty members at a large polytechnic university in Belgium. The sample includes questionnaire items on the motivation and perception of the researcher. This allows us to explore whether motivation and background characteristics (such as age, gender, retention, etc.,) of the researchers explain variations in measured research performance.

Citizen coproduction and efficient public good provision: Theory and evidence from local public libraries

In both public administration and economics, efficiency is brought forward as an important criterion for evaluating administrative actions. Clearly, its value as an assessment principle depends on our ability to adequately measure efficiency. This article argues that citizen’s coproduction in public services requires a careful reassessment of how we approach the measurement of productive efficiency in public service delivery. Theoretically, we illustrate that using observable outcomes (e.g., library circulation, school results, health outcomes, fires extinguished, and crimes solved) as output indicators is inappropriate and leads to biased estimates of public service providers’ productive efficiency. This bias arises because citizens co-determine final outputs, leaving them at least partly beyond the service providers’ control. Empirically, we find supportive evidence of both the existence and importance of such ‘demand-induced’ bias.

The role of innovations in secondary school performance - Evidence from a conditional efficiency model

This paper studies the influence of educational innovations on school performance. We apply a tailored, fully nonparametric conditional efficiency model to study secondary school efficiency in the Netherlands. The application uses official school data and a self-collected questionnaire on recent innovations in schools. In the nonparametric model, it is assumed that schools aim to maximize educational attainments of students under a budget constraint. The results suggest that innovations are positively related to efficiency. We find that profiling, pedagogic, process and education chain innovations are significantly related to school efficiency, whereas innovations in the professionalization of teachers are insignificantly related to school efficiency. Furthermore, the number of locations per school and the number of schools per governing body are negatively and significantly related to school efficiency. School type and region significantly influence school efficiency, whereas share of disadvantaged students, degree of urbanization and student/teacher ratio do not have significant influence.

Dropout prevention measures in the Netherlands, an evaluation

In line with the Lisbon Agenda, set by the European Council in the year 2000, European governments formulated ambitious plans to halve the level of early school-leavers by 2012. This paper outlines the dropout prevention measures in the Netherlands and analyzes their influence at both the individual and school level. While most policy measures correlate negatively with the individual dropout decision, only “mentoring and coaching” (i.e., matching of students with a coach from public or private organizations), “optimal track or profession” (e.g., work placement) and “dual track” (i.e., re-entering education for dropout students) have a significant negative impact on the individual dropout decision. By means of quantile regressions, we observe that schools with a relatively high dropout rate benefit the most from dropout prevention measures.

Does anybody notice? On the impact of improved truancy reporting on school dropout

Various policy measures have been taken in industrialized countries to reduce school dropout rates. This paper first examines the relationship between truancy and school dropout. Using fixed effects regressions and controlling for truancy peer group effects, we observe that truancy (measured as both a discrete dummy variable and a continuous count measure) positively correlates to early school leaving. A truant has a 3.4 percentage points higher risk of leaving school without a qualification. Second, we exploit the introduction of truancy reporting in a quasi-experimental identification strategy. In essence, the idea is straightforward: if students are better monitored with respect to truancy, schools can identify more easily students at risk. The results indicate that improved truancy reporting significantly reduces school dropout by 5 percentage points.

Nonparametric analysis of multi-output production with joint inputs

We present a novel framework for analyzing cost minimizing production behavior in multi-output settings. Our specific focus is on dealing with joint inputs, i.e. inputs that are simultaneously used for the production of multiple outputs. Here, we distinguish between two possible approaches. The cooperative approach takes a centralized perspective and assumes cost minimization at the aggregate firm level. By contrast, the noncooperative approach adopts a decentralized view and assumes cost minimization at the level of the individual output departments, which implies the possibility of free riding behavior for the joint inputs. Our framework is non-parametric in nature, which means that it allows for analyzing production behavior while avoiding (nonverifiable) prior functional structure for the production technology. We show that it naturally extends the existing nonparametric framework for analyzing single output production. We establish rationalizability conditions for cooperative as well as noncooperative production behavior. In addition, we introduce goodness-of-fit measures for evaluating the degree of violation of these conditions. An empirical application to the English and Welsh drinking water and sewerage sector shows the practical usefulness of our framework. Specifically, we compare the empirical validity of the cooperative and noncooperative models for describing the observed production behavior.