Stochastic vs. deterministic frontier distance output function: Evidence from Brazilian higher education institutions

Using data from the Brazilian Higher Education Census and other public institutions, this study aims to obtain and compare efficiency scores from stochastic frontier analysis (SFA) and data envelopment analysis (DEA) models for 56 Brazilian federal universities for the period of 2010 to 2016. The output distance function includes financial and human resources as inputs, and teaching, research, patents and third mission activities as outputs. The research is innovative considering: (i) the estimation of SFA for Brazilian universities as whole institutions, (ii) its comparison with DEA; and (iii) the inclusion of patents and third mission variables. The findings suggest there is inefficiency in Brazilian higher education production, with a very small increase through time and with some influence from universities and environmental characteristics. Thus, consolidated traditional institutions with university hospitals tend to be more efficient than the younger ones. The values and the rank of the efficiencies are sensitive to the model/method employed, presenting highly significant although modest correlations. In general, the inclusion of third mission activities improves the efficiencies for both approaches, mainly for DEA. Hence, as advised in other international comparative analyses, caution is required when deriving management and policy recommendations from the analytical results.