2013 DEA Workshop on Productivity, Regulation & Transportation

Research Workshop of the Israel Science Foundation

The ISF Workshop on Productivity, Regulation and Transportation was held from the 28th to the 31st of December 2013 on the Mount Scopus campus of Hebrew University. The workshop covered the theory of policy setting, regulation and efficiency measurement as well as fields of application including electricity, banking, infrastructure, public services (police, health and water), the environment and transportation such as bus, rail and aviation modes. The aim of the workshop was to discuss the latest methodologies for benchmarking with the intention of regulating the relevant industry whenever a competitive market needs to be emulated. Neither benchmarking nor price or quality regulation are simple to undertake and the real applications presented described many of the difficulties in the process. However, for reasons of transparency and to ensure sensible incentive-based regulation, such a process is necessary.

During the workshop, two panel sessions were organized. In the opening session on Sunday morning, the Police Commissioner of Israel spoke about the use of data envelopment analysis and balanced scorecards implemented by the Israeli police force within the Turning Point program which was initiated two years ago.

The final panel session was held in the Senate on the Mount Scopus campus. We were fortunate that Prof. Eytan Shishinski (Hebrew University), Prof. David Gilo (Head of the Anti-Trust Authority and Tel Aviv University), Mr. Shaul Meridor (ex-Finance Department Head of Budgeting), Prof. Rajiv Banker (Temple University) and Prof. Avishay Braverman (Member of Parliament) all presented their views on regulating industry in the 21st Century. Prof. Nicole Adler of the School of Business Administration at Hebrew University described the impact of regulation on the behavior of companies whether public or private and called for Israel to begin standardizing the regulatory process across the various government departments. The process needs to begin with collecting relevant data, and if the operator is a monopoly in Israel (the airport, the railway etc.), such data needs to cover comparable operators internationally. Subsequently, a benchmarking process will enable the regulator to set a realistic level of efficiency to be achieved over time using the benchmarked efficiency estimates. In the longer term, such a process can set the x-efficiency to be included in the incentive-based pricing policy. The result of such an approach will be to gradually reduce the cost of living index in Israel, a target that would appear to be critical for Israeli society today.