Comment on estimating school efficiency

Abstract In a recent paper, Bifulco and Bretschneider [Econ. Edu. Rev. 20 (2001) 417] analyzed the performance of data envelopment analysis (DEA) and corrected ordinary least squares (COLS) using simulated data. The results were discouraging as both methods performed poorly even in cases when measurement error was assumed away. The authors concluded that current methods of evaluating school district performance are inadequate for performance-based school reform. As will be shown in this comment, the simulation performed was faulty due to inconsistency of the data generating process and the methods employed. After correcting for this inconsistency and re-estimating efficiency, the results are more consistent with the literature and more favorable to both approaches.