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Quality as a Latent Heterogeneity Factor in the Efficiency of Universities

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  • Daraio, Cinzia
  • Simar, Léopold

    (Université catholique de Louvain, LIDAM/ISBA, Belgium)

  • Wilson, Paul W.

Abstract

In this paper we show the usefulness of recent advanced nonparametric efficiency techniques to model the performance of universities in the presence of observed and unobserved heterogeneity. Using directional distances for benchmarking purposes, we identify a latent heterogeneity factor related to the human capital of the universities and their management, that is independent from their size, and interpret the identified latent factor as a “quality” factor of the universities. After testing the significance of this latent factor, we investigate its impact on the boundary of the production set (efficient frontier) and on the distances of the units from the efficient frontier. The frontier and the efficiency distribution of our European Universities sample appear influenced by our estimated latent quality factor. We investigate these impacts from various points of view, including the trade-off between our quality factor and efficiency as well as the roles of size and specialization.

Suggested Citation

  • Daraio, Cinzia & Simar, Léopold & Wilson, Paul W., 2021. "Quality as a Latent Heterogeneity Factor in the Efficiency of Universities," LIDAM Reprints ISBA 2021011, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    • Handle: RePEc:aiz:louvar:2021011
    DOI: https://doi.org/10.1016/j.econmod.2021.03.004
    Note: In: Economic Modelling, Vol. 99, no. June 2021, p. 105485 (2021)
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    3. Yunguo Lu & Lin Zhang, 2023. "Environmental information disclosure and firm production: evidence from the estimated efficiency of publicly listed firms in China," Journal of Productivity Analysis, Springer, vol. 59(1), pages 99-119, February.
    4. Sun, Yu & Yang, Feng & Wang, Dawei & Ang, Sheng, 2023. "Efficiency evaluation for higher education institutions in China considering unbalanced regional development: A meta-frontier Super-SBM model," Socio-Economic Planning Sciences, Elsevier, vol. 88(C).
    5. Manuel Salas-Velasco, 2024. "Nonparametric efficiency measurement of undergraduate teaching by university size," Operational Research, Springer, vol. 24(1), pages 1-29, March.
    6. Thyago C. C. Nepomuceno & Cinzia Daraio & Ana Paula C. S. Costa, 2021. "Multicriteria Ranking for the Efficient and Effective Assessment of Police Departments," Sustainability, MDPI, vol. 13(8), pages 1-15, April.
    7. Cinzia Daraio & Leopold Simar, 2022. "Approximations and Inference for Nonparametric Production Frontiers," LEM Papers Series 2022/14, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. Fall, François Seck & Tchakoute Tchuigoua, Hubert & Vanhems, Anne & Simar, Léopold, 2022. "Investigating the unobserved heterogeneity effect on microfinance social efficiency," LIDAM Discussion Papers ISBA 2022010, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    9. Agasisti, Tommaso & Egorov, Aleksei & Serebrennikov, Pavel, 2023. "Universities’ efficiency and the socioeconomic characteristics of their environment — Evidence from an empirical analysis," Socio-Economic Planning Sciences, Elsevier, vol. 85(C).
    10. Rella, Angela & Rubino, Michele & Raimo, Nicola & Vitolla, Filippo, 2024. "Does the digitalization of municipalities affect the efficiency of universities? An Italian case study using DEA and Malmquist index approaches," Technology in Society, Elsevier, vol. 77(C).

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    More about this item

    Keywords

    nonparametric efficiency ; performance assessment ; benchmarking ; directional distances ; conditional efficiency ; observed and unobserved heterogeneity ; European universities ; quality;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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