Cost efficiency analysis of socialized housing development in the Philippines
Date
2012-03
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Abstract
In response to the growing problem of housing in the Philippines, the government encourages private housing developers to engage in socialized housing production through the Republic Act 7279. Likewise, it is also involved in the production of socialized housing units through the National Housing Authority (NHA). In this study, we look at the relative cost efficiency of NHA compared with a sample private housing developer. In order to do this, we have used a non-parametric linear programming method called Data Envelopment Analysis, a parametric method called Stochastic Frontier Analysis which relies on econometric and statistical concepts in measuring cost efficiency, and a direct method of determining the portion of socialized housing units produced per unit cost of each input for the two entities. According to theory, public institutions like NHA are usually less efficient because of the lack of market discipline that by contrast applies to private firms. However, the results of our study do not provide support for this theory. In the time frame that this research covers from 2004 to 2009, NHA appears to be relatively just as efficient as its private housing developer counterpart except in 2007. Limitations of this study, however, exist and, hence, caution must be taken in the interpretation of the results.
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Keywords
housing, cost efficiency, Data Envelopment Analysis, Stochastic Frontier Analysis