Int. J. Management and Decision Making, Vol. 10, Nos. 5/6, 2009 443 Copyright © 2009 Inderscience Enterprises Ltd. Measuring efficiency of Higher Education institutions Tommaso Agasisti* Politecnico di Milano, Department of Management, Economics and Industrial Engineering, p.za Leonardo da Vinci, 32, 20133 Milano, Italy Fax: 39 02 2399 2720 E-mail: tommaso.agasisti@polimi.it *Corresponding author Antonio Dal Bianco IReR – Istituto Regionale di Ricerca della Lombardia, via Copernico, 38, 20125 Milan, Italy Fax: 39 02 6696 945 E-mail: dalbianco@irer.it Abstract: In this paper, we use Data Envelopment Analysis (DEA) and Stochastic Frontier (SF) analysis to obtain efficiency ranking and scores of Italian universities. The results are then compared. Differences between DEA and SF results are more attributable to heterogeneity among universities than to differences in methodologies. Indeed, after clustering universities in homogenous groups, similarities between DEA and SF results emerge. Finally, some policy implications are derived. Keywords: HE; higher education; universities; efficiency; cost recovery; DEA; data envelopment analysis; SF; stochastic frontiers; Italy. Reference to this paper should be made as follows: Agasisti, T. and Dal Bianco, A. (2009) ‘Measuring efficiency of Higher Education institutions’, Int. J. Management and Decision Making, Vol. 10, Nos. 5/6, pp.443–465. Biographical notes: Tommaso Agasisti is Researcher at the Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Milan, Italy. His research activity is focused on Public Finance and Management, and the mainstream is in the field of economics of education. He works on financing models for higher education systems, both from empirical and theoretical perspectives. Moreover, his studies deal with the efficiency analysis of educational institutions, especially in higher education. Lastly, his researches are also about the management of universities, within the framework of new public management. Antonio Dal Bianco is a Research Assistant at IReR (Regional Centre of Research of Lombardy). Currently, he is working on higher education financing, universities efficiency and small- and medium-firms’ demand of qualified manpower. His areas of interest are regional innovation system, university–firm spill over analyses and knowledge impact. He has extensive knowledge in statistics and econometrics. He is familiar with applied evaluation methods.