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Article Excerpt
Abstract
This paper analyzes the technical efficiency of the Lisbon police precincts in order to investigate its performance. A stochastic cost frontier model is used to generate efficiency scores, assuming that efficiency is time varying. It investigates its efficiency and finds that the results are, at best, mixed since the efficient scores are low and not time varying. Therefore, an alteration of management procedures is proposed in order to enable efficiency to be increased based on a governance-environment framework. (JEL C14, D24, H41, L31)
Introduction
Police efficiency is a theme which attracted some research in the past [Thanassoulis, 1995; Carrington et al., 1997; Drake and Simper, 2001]. The importance of analyzing efficiency in police precincts is derived from the need that police units have to stay effective. In this environment, the identification of the inefficient unit is of paramount importance, because it can suggest ways to improve its performance and to converge for the best practice frontier.
There are normally two types of benchmarking: 1) the internal method, conducted among different units of the same enterprise, which is the procedure adopted in this paper, and 2) the external method, based on comparing different enterprises in the same sector [for this second method, see Drake and Simper, 2001]. Following Farrell [1957], researchers applying frontier estimation techniques represent technology by a bounding production function that reflects best-practice production, defined in terms of the maximum real output technologically possible to produce given available inputs. Production, which can be simply defined as a process by which inputs are combined, transformed, and turned into outputs, is a fundamental concept in economic theory [Varian, 1987].
Two methods to analyze productivity quantitatively are the econometric frontier and data envelopment analysis (DEA). Both have their advantages and drawbacks. Unlike the econometric stochastic frontier approach, the DEA permits the use of multiple inputs and outputs, but neither does impose any functional form on the data; nor does it make distributional assumptions for the inefficiency term. Both methods assume that the production function of the fully efficient decision unit is known. In practice, this is not the case and the efficient isoquant must be estimated from the sample data. In these conditions, the frontier is relative to the sample considered in the analysis.
A first important advantage of the econometric frontier is that there are a number of well-developed statistical tests to investigate the validity of the model specification-tests of significance for the inclusion or exclusion of factors or for the functional form. The accuracy of these hypotheses depends, to some extent, on the assumption of normality of errors, which is not always fulfilled. A second advantage of the econometric frontier is that if a variable which is not relevant is included, it will have a low or even zero weighting in the calculation of the efficient scores, so its impact is likely to be negligible. This is an important difference from DEA, where the weights for a variable are usually unconstrained. A third advantage of the econometric frontier is that it permits the decomposition of deviations from efficient levels between noise (or stochastic shocks) and pure inefficiency, while DEA classifies the whole deviation as inefficient.
The motivation for the present research derives from three issues related to police forces in the European Union. First, the national governments are obliged to control the public expenditure under the rules established by the European Maastricht Treaty, forcing the police forces to perform their task in a cost-controlling environment. Second, the dismantle of the national boundaries and the establishment of free circulation at the European level means that criminals travel more easily than before, increasing the work of the police forces. Third, security issues are regularly discussed in the media, namely during electoral periods, rising the scrutiny of the police forces.
In this paper, a benchmarking exercise is undertaken on the Lisbon police precincts in order to estimate the efficiency scores at the econometric frontier. The paper enlarges on earlier research in this field first, by carrying out an internal benchmarking study similar to Sun [2002], but it also uses a parametric frontier at the same time.
The paper is organized as follows. The next section describes the institutional setting of the analysis. In the following sections, the existing literature on police precinct efficiency is reviewed, the theoretical framework is explained, the data and results are set out, and the efficiency ranking-list is discussed. The conclusions are presented in the final section.
Contextual Setting
In Portugal, there are two national police forces responsible for the prevention and detection of crime and the maintenance of law and order. These are the Guarda Nacional Republicana (Republican National Guard), known as the GNR and the Policia de Seguranca Publica (Public Security Police) or PSP. Other smaller forces, which exercise a specific policing function, are the Frontier Police (Servico de Estrangeiros e Fronteiras), the Maritime Police (Sistema de Autoridade Maritima), the Information and Security...
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