The number of pints of blueberries picked or boxes assembled using an hour of labor are simple examples. Productivity, used as a physical concept, inherently adjusts for differences in prices of inputs and outputs across space and over time. While productivity measures are cast in terms of physical units that vary over time and across situations, efficiency connotes maximizing outputs for a given set of fixed resources.2 Maximizing efficiency should be the same as maximizing productivity if prices are set by the market (which is not the case for all aspects of higher education). Accountability is a managerial or political term addressing the need for responsibility and transparency to stakeholders, constituents, or to the public generally.
Application of a productivity metric to a specific industry or enterprise can be complex, particularly for education and certain other service sectors of the economy. Applied to higher education, a productivity metric might track the various kinds of worker-hours that go into producing a student credit hour or degree. The limitation of this approach is that, because higher education uses a wide variety of operational approaches, which in turn depend on an even wider variety of inputs (many of them not routinely measured), it may not be practical to build a model based explicitly and exclusively on physical quantities. Of even greater significance is the fact that the quality of inputs (students, teachers, facilities) and outputs (degrees) varies greatly across contexts.
A primary objective of industries, enterprises, or institutions is to optimize the efficiency of production processes: that is, to maximize the amount of output that is physically achievable with a fixed amount of inputs. Productivity improvements are frequently identified with technological change, but may also be associated with a movement toward best practice or the elimination of inefficiencies. The measurement of productivity presumes an ability to construct reliable and valid measures of the volume of an industry’s (or firm’s) output and the different inputs. Though productivity improvements have a close affinity to cost savings, the concepts are not the same. Cost savings can occur as a result of reduction in input prices, so that the same physical quantity of inputs can be purchased at a lower total cost; they are also attainable by reducing the quantity or quality of output produced. But, by focusing on output and input volumes alone, it becomes difficult to distinguish efficiency gains from quality changes. To illustrate, consider homework and studying. Babcock and Marks (2011) report that college students currently study less than previously. Assuming studying is an input to learning, does this mean that students have become more productive or now
2Kokkelenberg et al. (2008:2) write that: “Economists describe efficiency to have three aspects; allocative efficiency which means the use of inputs in the correct proportions reflecting their marginal costs; scale efficiency which considers the optimal size of the establishment to minimize long-run costs; and technical efficiency which means that given the establishment size and the proper mix of inputs, the maximal output for given inputs under the current technology is achieved.” It should be noted that that the productivity index approach, on its own, is unlikely to say much about optimal size and scale efficiency.