HBCU efficiency and endowments: An exploratory analysis

Abstract

Discussions of efficiency among Historically Black Colleges and Universities (HBCUs) are often missing in academic conversations. This article seeks to assess efficiency of individual HBCUs using Data Envelopment Analysis (DEA), a non-parametric technique that can synthesize multiple inputs and outputs to determine a single efficiency score for each institution. The authors hypothesized that institutions with higher endowments will have higher efficiency scores due to an increased ability to acquire more productive capital. To test this hypothesis, efficiency scores were regressed on endowments and HBCU status, with control variables denoting if institutions are public or religiously affiliated. From DEA, we found that HBCUs were on average slightly more efficient that Predominantly White Institutions. Endowment levels were found to be significant determinants of efficiency for both sets of institutions. This suggests (1) that the general perception of HBCUs as inefficient requires reconsideration and (2) that schools with the most endowment resources are generally more efficient. Less efficient HBCUs should perhaps devote resources to building endowment levels to increase efficiency. We can also see the importance of methodologies allowing for investigation of both differences among HBCUs and differences in operational contexts among HBCUs and other schools. © 2010 Macmillan Publishers Ltd.