EFFICIENCY OF PUBLIC SPENDING ON HIGHER EDUCATION: A DATA ENVELOPMENT ANALYSIS FOR EU-28

Abstract

One of the main goals of education policy is to enhance educational outcomes. If resources are used inefficiently, they will fail to maximise those outcomes. Data Envelopment Analysis was used to calculate technical efficiency of public spending on education for EU-28 using the latest higher education statistics available. Focusing on European higher education, conceptual and methodological issues related to the measurement and analysis of efficiency were discussed. The most efficient countries are identified and also countries for which real efficiency improvements are possible. A novel set of variables is used to highlight more appropriately the distinctiveness of the higher education sector and the relationship between input and outputs. The advantage of using Data Envelopment Analysis is that it identifies the best performing decision, making units and not the averages. This type of information about the efficiency of public spending on education is of importance to many parties. It can be used to promote ‘yardstick’ competition in the areas of education where the lack of market mechanisms is apparent, guide policy proposals, and to enhance the monitoring of education. Key words: efficiency in education, higher education, public spending, data envelopment analysis, European Union.