Effectiveness analysis of quality achievements for university Departments of Economics

When university Departments are under pressure to improve the assessed quality of their research and teaching in several different directions simultaneously, questions arise as to the nature of the corresponding feasible set and the shape of its frontier. When quality is judged by reference to grades whose precise thresholds are subject to stochastic uncertainties, both convex and nonconvex regions of the frontier of the feasible set may be present. The appropriateness of deploying standard empirical techniques of frontier estimation is then called into question in evaluating the relative effectiveness of individual Departments and their scope for improvements. The empirical results of frontier estimation, here applied to UK university Departments of Economics, are shown to be sensitive to the choice of nonparametric frontier technique deployed, with Free Disposal Hull analysis providing an alternative estimation technique that can allow for both convex and nonconvex regions of the possibility frontier. Issues of the endogeneity of the resources available to Departments are also raised in this applied context, with a need to incorporate into the effectiveness analysis the potential feedback effects of improved research and teaching quality upon the achievement possibility set.