Efficiency Analysis of Higher Education Institutions: Use of Categorical Variables

Abstract

This paper focuses on the Data Envelopment Analysis (DEA) based efficiency evaluation to find the impact of two-step categorical impact on the enrollment efficiency of colleges in Bihar, one of the largest states of India. The objective of the study is to find the impact of factors, other than college-specific, on the efficiency of the colleges. The proposed research includes colleges funded and managed through seven state public universities. To follow the homogeneity condition of DEA, colleges providing courses of Arts (languages and humanities only), Science, and Commerce only, have been selected. The numbers of students enrolled in undergraduate and postgraduate courses are considered as two outputs. Numbers of teaching and non-teaching staff are considered as inputs. Colleges have been classified into two categories based on their presence in the rural or urban areas. The efficiency of a college due to any categorical value is calculated as the ratio of overall efficiency and efficiency calculated with similar categorical Decision-Making Units (DMUs) only. The impact of both the categorical variables, affiliation to university and geographical presence, has been analyzed through the hypothesis testing with the null hypothesis that there is no impact of category on the efficiency of DMUs due to a categorical variable.