Designing incenttives in local public utilities, an international comparison of the drinking water sector

Direct and indirect standardization procedures aim at comparing differences in health or differences in health care expenditures between subgroups of the population after controlling for observable morbidity differences. There is a close analogy between this problem and the issue of risk adjustment in health insurance. We analyse this analogy within the theoretical framework proposed in the recent social choice literature on responsibility and compensation. Traditional methods of risk adjustment are analogous to indirect standardization. They are equivalent to the so-called conditional egalitarian mechanism in social choice. In general, they do not remove incentives for risk selection, even if the effect of non-morbidity variables is correctly taken into account. A method of risk adjustment based on direct standardization (as proposed for Ireland) does remove the incentives for risk selection, but at the cost of violating a neutrality condition, stating that insurers should receive the same premium subsidy for all members of the same risk group. Direct standardization is equivalent to the egalitarianequivalent (or proportional) mechanism in social choice. The conflict between removing incentives for risk selection and neutrality is unavoidable if the health expenditure function is not additively separable in the morbidity and efficiency variables.

Designing incentives in local public utilities, an international comparison of the drinking 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 (DEA), 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 to the bias corrected estimates, 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.Business; Economics; Efficiency; Management; Research; Research in economics; University; University-research; Incentives; Utilities; International; Sector;

Franchising Regional Rail Passenger Services in Germany – New Evidence on the Efficiency in Using Subsidies

This paper examines the outcomes of franchising regional rail passenger services in Germany at the global level and analyses the regional differences in the efficiency of using subsidies for franchised regional rail services. It provides evidence on the positive outcomes of the franchising approach at the global scale regarding service supply, patronage, subsidies paid and quality of service. The regional differences in the use of funds are studied by means of a two-stage efficiency analysis which includes quality of service variables and financial indicators. It is based on a panel dataset for the period 2003-2014 for a subsample of 22 public transport authorities. The analysis shows that a higher share of tendering, a higher share of gross contracts and longer and smaller contracts were efficiency-enhancing factors in the period of analysis. These impacts are found both in a model without inclusion of quality of service variables and models which includes them.Institute of Transport and Logistics Studies. Faculty of Economics and Business. The University of Sydne

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

Regional effectiveness of innovation – leaders and followers of the EU NUTS 0 and NUTS 2 regions

Innovation constitutes an important factor for growth in all EU countries. Regions of the EU play a principle role in shaping new innovation trajectories and in bringing out the hidden potential for national growth. However, it is not only the level of innovation that diversifies regions, but also the innovative potential and the level of its realization. Therefore, the aim of this paper is to assess the realization of innovative potential, defined as effectiveness, in EU NUTS 0 and, if possible, NUTS 2 regions. To accomplish this goal a relative effectiveness method in used. The DEA (Data Envelopment Analysis) makes it possible to analyse the relative technical effectiveness based on regional inputs and outputs, without incorporating the legal and technological specifications of innovations, thus treating it like a production process. The inputs of the process are employment in technology and knowledge-intensive sectors and R&D expenditure, while the outputs include the number of patents and GDP. All variables are standardized by the size of the economically active population. DEA results divide regions in to two groups – effective, being the leaders; and ineffective, or followers. The DEA approach was combined and extended by ESDA (Exploratory Spatial Data Analysis) in order to pinpoint spatial patterns of innovation efficiency across NUTS 2 regions. Defining the best practices and implementing the learning-from-the-best policy is important in the process of regional development and specialization

Application of Multi-Criteria Decision Making (MCDM) Approached on Teachers' Performance Evaluation and Appraisal

Education quality is the ultimate result of significant contribution by each stake holder in an education system. However, it is believed that faculty quality has direct bearing on improving and sustaining quality in education. Teacher’s performance evaluation is nothing but a Multi Criteria Decision Making Problem (MCDM). There are several quality attributes that influence the efficiency of a potential teacher while guiding his/her students towards a positive and value added academic outcome. However, the extent of significance of quality attributes may vary from individuals’ viewpoint. In other words, different attributes may have different weightage according to their priority of significance while evaluating quality/performance level of a teacher. But there is no clear-cut methodology for assigning this priority weightage for the attributes. Therefore, expert opinion is indeed required to estimate those attribute weightage values. In the present reporting, a methodology adapted from Multi-Criteria-Decision Making (MCDM) has been proposed in order to evaluate performance of a teacher. Grey relational analysis has been explored in order to prioritize quality attributes that are expected to influence performance level of a teacher. Based on COPRAS- method, numerical values (interval scores) on different attributes assigned for a group of teachers (multiplied by individual weightage) have been accumulated to compute an overall quality estimate indicating performance level of individual teachers. Application feasibility as well as efficiency of this method and guidelines in solving such a multi-attribute decision making problem has been described illustratively in this paper

Application of DEA in benchmarking: a systematic literature review from 2003–2020

Benchmarking is an effective method for organizations to increase their productivity, quality of products, reliability of processes or services. The organization may make a comparison between its performance and that of the peers from benchmarking, and recognize their advantages as well as disadvantages. The main objective of the present systematic literature review has been the study of DEA benchmarking process. Therefore, it examined and gave a summary of various DEA models applied worldwide to improve benchmarking. Accordingly, a list of published academic papers that appeared in high-ranking journals between 2003 and February 2020 was collected for a systematic review of the DEA benchmarking application. Consequently, the papers selected have been classified according to year of publication, purpose of research, outcomes and results. This study has identified eight major applications including: transportation, service sector, product planning, maintenance, hotel industry, education, distribution and environmental factors. They take up a total of 82% of all application-embedded papers. Among all the applications, the highest recent development has been in both the transportation and service sectors. Results showed higher potential of DEA as a suitable evaluation method for the further benchmarking researches, wherein the production feature between outputs and inputs has been practically lacked or very hard to obtain. First published online 4 January 202

Efficiency, Conflicting Goals and Trade-Offs: A Nonparametric Analysis of the Water and Wastewater Service Industry in Italy

This paper presents a benchmarking study of the water and wastewater industry in Italy. A three-stage modeling approach was implemented to measure the efficiency of 53 utility operators. This approach is based on the implementation of network and conventional data envelopment analysis (DEA) to model the production process of the water service utility operators. In comparison to the conventional black-box or one-stage production model generally adopted in previous studies, the proposed approach provides information relative to the different efficiency components of the stages and blocks of the water service production process and its overall efficiency. Further, by shifting the efficiency analysis to a two-dimensional performance space, i.e., resource and market-efficiency, it offers a more comprehensive view of the water service industry and allows accounting for different business goals at the same time and for an investigation of industry trade-offs. Results show that the operators’ efficiencies in the Italian water service industry are generally variable and low. There are no water service utilities which are 100% efficient from the resource-efficiency perspective, and the maximum efficiency score is 0.545. Efficiency measurements suggest that there is a general orientation of the Italian water industry to not invest in upgrading and improving the infrastructure assets, and achieving an acceptable efficiency in the operations is critical to delivering water services to market in an efficient way. Only one utility operator is 100% efficient from the market-efficiency perspective. The low tariffs adopted by the water service operators do not allow the gaining of satisfactory service remuneration and the achievement of long-term business sustainability. The joint analysis of the resource and market efficiency scores indicates that there is a trade-off between the corresponding business goals

COOPER-framework: A Unified Standard Process for Non-parametric Projects

Practitioners assess performance of entities in increasingly large and complicated datasets. If non-parametric models, such as Data Envelopment Analysis, were ever considered as simple push-button technologies, this is impossible when many variables are available or when data have to be compiled from several sources. This paper introduces by the ‘COOPER-framework’ a comprehensive model for carrying out non-parametric projects. The framework consists of six interrelated phases: Concepts and objectives, On structuring data, Operational models, Performance comparison model, Evaluation, and Result and deployment. Each of the phases describes some necessary steps a researcher should examine for a well defined and repeatable analysis. The COOPER-framework provides for the novice analyst guidance, structure and advice for a sound non-parametric analysis. The more experienced analyst benefits from a check list such that important issues are not forgotten. In addition, by the use of a standardized framework non-parametric assessments will be more reliable, more repeatable, more manageable, faster and less costly.DEA, non-parametric efficiency, unified standard process, COOPER-framework.