Measuring the Efficiency and Productivity of British Universities: An Application of DEA and the Malmquist Approach

This paper uses data envelopment analysis to examine the technical efficiency (TE) of 45 British universities in the period 1980/81 to 1992/93. This period was chosen primarily because it was characterized by major changes in public funding and in student : staff ratios. To shed light on the causes of variations in efficiency, TE is decomposed into pure technical efficiency (PTE), congestion efficiency (CE) and scale efficiency (SE). The analysis indicates that there was a substantial rise in the weighted geometric mean TE score during the study period, although this rise was most noticeable between 1987/88 and 1990/91. The rising TE scores are attributed largely to the gains in PTE and CE, with SE playing a minor role. The Malmquist approach is then used to distinguish between changes in technical efficiency and intertemporal shifts in the efficiency frontier. The results reveal that total factor productivity rose by 51.5% between 1980/81 and 1992/93, and that most of this increase was due to a substantial outward shift in the efficiency frontier during this period.