UNIVERSITY COST MEASUREMENT and PRODUCTIVITY ASSESSMENT

EXPLAINER SERIES

Introducing the Research and Education Efficiency Frontier (REEF) Methodology

Explainer 1
by HERG
05 January 2024

The need to measure costs and productivity in higher education is crucial for the effective and efficient use of resources. University management needs to understand its costs to employ scarce resources productively. Those who administer government policy need to understand the costs to direct funding in a valid and efficient manner.

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Recently released analysis finds that one large Group of Eight university outperformed other public universities in its research and education productivity outcomes during the pandemic.

The joint and common cost problem arises where there are two or more outputs that arise from costs that are shared in the production of these outputs. In many situations, the ability to assign costs to these two or more outputs is not complex. But there are instances where it is highly complex. In these situations, there is a need to use advanced analytics to provide a valid and reliable estimate of costs.

Last week in The Australian, Australian National University economics professors Bruce Chapman and Rabee Tourky reignited a debate about a levy on international student tuition revenue (“Universities should pay levy on ‘foreign student industry’ ”, 15/11).

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