Formula funding in higher education in Baden-Wuerttemberg -: Reflections on statistical adequation in policy-making

The article analyses the development and structure of formula funding in higher education in Baden-Wurteemberg from economic, political, and statistical perspectives. The verbal agreement of the finance model, made in 1999 between ministry and universities, is transformed into equations and compared with the intended goals. The model aims at better performance in teaching, research, postgraduate training, and equal opportunities - by setting incentives and inducing competition between universities. The core of these goals can probably be achieved, albeit with limitations and distortions. The obvious cause of the restrictions are deficits in statistical adequation: Vague definitions of goals are accompanied by very specific statistical indicators and mathematical functions. The ultimate cause of the restrictions are the bargaining processes during the development of the model. The agreement implies that those involved were able to realise their foremost specific goals. Thus at least some limitations and distortions are intended; this is both an essential precondition for coming to an agreement and a hindrance for optimal adequation. Improvements can be expected if independent expertise is integrated in the further development mainly applied economists and statisticians with specialist knowledge in aggregated indicators and index theory.