The most common way of measuring the efficiency of an education programme, institution or system of delivery is to divide the total costs by the total number of students. This involves using the Average Costs Equation, which was introduced in Unit 2.
Average Costs Equation:
- ACs = TC ÷ TNs
- ACs = average cost per student
- TC = total costs for programme or institution as a whole
- TNs = total number of students
Notwithstanding the limitations of the average cost per student measure, it is commonly used to calculate the efficiency of one programme in relation to another, or of one institution in relation to another. The term efficiency ratio is used to refer to the relationship between the average cost per student in one programme, institution or system of education and the average cost per student in another. This measure is commonly used to compare the efficiency of ODL with that of conventional education. However, unless an appropriate calculation is made to establish equivalency between those studying through ODL and full-time students in conventional education, this measure does not compare like with like and is misleading.
Equation for Efficiency Ratio
- ER = ACSODL ÷ ACSC
- ER = efficiency ratio
- ACSODL = average cost per FTE student in ODL programme/institution
- ACSC = average cost per FTE student in conventional programme/institution
- When the efficiency ratio equals 1.00, then both modes are equally efficient.
- When the efficiency ratio is less than 1.00, then ODL is more efficient.
- When the efficiency ratio is greater than 1.00, then ODL is less efficient.