Service Delivery and Efficiency in Danish Local Governments A Comprehensive Approach

Peter Bogetoft, Jesper Wittrup

Research output: Working paperResearchpeer-review

Abstract

In this paper, we introduce a new method to evaluate the services offered by Danish local governments. In contrast with previous measures used in Denmark, our approach does not rely on the amount of money spent by a local government but rather on the actual services it provides to its citizens. Traditional composite service level indicators aggregate different service dimensions using fixed weights. Unfortunately, these weights often reflect subjective value judgments. In our new approach, we eliminate the use of fixed weights. Instead, we employ flexible weighting to present individual local governments in the most favorable light, thus giving them the highest possible measure of the relative service level. If a local government has a relatively high service level in a specific area compared to other municipalities, that dimension will carry a higher weight when calculating the municipality’s overall relative service level. This approach accounts for the fact that municipalities may have different priorities and reduces the risk of undervaluing the general service level of a particular municipality. We adopt the “benefit-of-the-doubt” approach to construct the composite service level index. This study includes 55 output indicators in a data envelopment analysis DEA based assessment of local government services. The combination of many indicators and the “benefit-of-the-doubt” approach ensures a more cautious and fair evaluation of each local government. It also makes it challenging for an inefficient local government to justify poor performance. When comparing our new indicator for local government services with the traditional service level indicator (which is based on expenditures), we find no significant correlation between the two. Owing to the lack of correlation between services and expenditures, there is potential for improving the overall efficiency of local governments if they are willing to learn from each other’s experiences. We estimate potential gains of between 6% and 10% of current expenses.
Original languageEnglish
Place of PublicationKøbenhavn
PublisherRockwool Fondens Forskningsenhed
Number of pages31
Publication statusPublished - Nov 2024
SeriesStudy Paper. The Rockwool Foundation Research Unit
Number231
ISSN0908-3979

Cite this