Super SBI Dynamic Network DEA approach to measuring efficiency in the provision of public services

Abstract

The current financial crisis has had a significant impact on European governments’ finances and has led to a series of government interventions to control the public debt and deficit. Therefore, the aim of this paper is to identify inefficiencies in the management of public finance, such as overspending, unreasonable debt, and excessive taxes, while maintaining the same level of social welfare. Thus, we propose a two‐stage network data envelopment analysis (DEA) structure that accounts for both allocation of the public budget and transformation of government expenditures into services to the people and the economy. Financial assets, debt, and employment have been included as carryover activities over successive periods of time. Finally, a super‐efficiency approach allows discriminating between the efficient European governments. We have applied the proposed approach to the period from fiscal years 2008 to 2012. Results show that not only high‐deficit countries, but also major countries such as Germany and France have performed poorly. The slack‐based measure of inefficiency (SBI) metrics, whose directional vector components are defined as the yearly national GDP, point out the feasible reductions in taxes and debt issuances, along with feasible targets for government expenditure.

Evaluation of Efficiency in Selected Areas of Public Services in European Union Countries

“…DEA is suitable to detect the technical efficiency of compared units (e.g., countries), meaning that they use the same inputs to produce the same outputs, with different performance [45]. DEA has become the most prominent method for performance measurement and has been commonly used by different scholars to analyze the efficiency of expenditure of public services, e.g., References [46,47]. The model can be built on the assumption of constant returns to scale (one unit of input generates one unit of output) when all DMUs are operating at optimal scale (CCR model).…”

A robust DEA‐centric location‐based decision support system for expanding Recreovía hubs in the city of Bogotá (Colombia)

“…DEA is a nonparametric method, which has been proved to be a powerful decision tool being widely used for evaluating the relative efficiency of decision‐making units (DMUs) in versatile applications (Saranga and Phani, ; Kounetas et al., ; de Figueiredo and Marca, ; Miranda et al., ; Chiu et al., ; Santín, ; Yadav et al., ; Shyu et al., ; Souza and Gomes, ; Gomes et al., ; Hoon et al., ; Moreno and Lozano, ; Tran and Villano, ). Building on the work of Farrell (), it was first generalized by Charnes et al.…”

Performance assessment and definition of improvement paths for microfinance institutions: an application to a network of village banks in Cameroon

“…The main advantage of DEA is the provision of efficiency scores that can be used as specific goals on which managers can focus to improve their performance within a multiple input and output context as well as the identification of best performers that are not always visible through commonly used management methodology (Sherman and Zhu, ) and can be used as role models in the process of efficiency improvement. DEA has already been applied in numerous domains such as accounting (Hsiao et al., ), agriculture (Chemak et al., ; Da Silva e Souza and Gonçalves Gomes, ; Watto and Mugera, ), airlines (Gomes Junior et al., ), education (Kounetas et al., ; Tran and Villano, ), hardware computers (Sahoo et al., ), hospitals (Marques and Carvalho, ; Ghiyasi, ), power plants (Yadav et al., ; Calabria et al., ), soccer players (Santin, ), and banking and finance (Basso and Funari, ; Chiu et al., ; Shyu et al., ; Chen et al., ; Moreno and Lozano, ), among others.…”