"Action and reaction" - a new public sector effectiveness assessment methodology

Abstract

The main contribution of the paper is the development of a new way of assessing the efficiency of public administration using statistical methods - multivariate regression (identification of exogenous factors) and residual analysis (identification of regression residuals). The methodology presented is intuitive, practical and, if appropriately set up, globally applicable for the evaluation of a wide range of processes taking place in the public sector on the principle of "action and reaction". Putting the methodology into practice can go some way to satisfying the "taxpayer hunger" for information about whether the money they pay in taxes is being used wisely. It makes it possible to assess efficiency in a particular institution or to compare similar processes in several institutions over a given period of time. The methodology has been developed on the basis of audit findings (prepared by the supreme audit institution for the public sector in a democratic state) and their implications. The developed methodology brings a new perspective to the traditional claim that public sector effectiveness is virtually impossible to measure and that factors for objective evaluation of public sector managers cannot be easily established.