Evaluating the Comparative Efficiency of Eleven States’ Highway Expenditures

Abstract

In an era of budget deficits and financial cutbacks, the efficiency of state highway finances dictates future investment in road construction and maintenance. Considering the significant impact of highway infrastructure on the survival and competitiveness of the logistics industry, this paper aims to develop a meaningful set of benchmarks that will guide the state government authority in making wise investment decisions regarding road construction and maintenance. In particular, we propose a data envelopment analysis that is proven to be useful for measuring the operational efficiency of various profit or non-profit organizations. Using the examples of state highway finances for Kentucky and other comparable states in the United States, this paper illustrates the usefulness of data envelopment analysis for the efficient allocation of financial resources to road construction and maintenance.