Perils of simplistic classifications of universities : a preliminary case study of economic departments

Universities represent a highly complex organizational structure that is beset with serious informational problems. A simplistic allocation rule based on university rankings is sometimes applied to fund disciplines/departments in order to promote efficiency. This study shows the pitfalls of using university rankings to glean information on rankings of disciplines, or departments, across universities. We offer a new measure to quantify the mismatch between university rankings and department rankings, and stress the need for using the rankings of departments for allocating research funds. We marshal evidence from Europe, USA and also from the global rankings of universities and departments of economics to argue that rankings of universities do not statistically explain the rankings of economics departments. Therefore, in order to foster competition and promote efficiency, it is mandatory to develop classifications/rankings of departments, reward good performance and publicise discipline-based research and teaching performance. This study then examines the research performance of staff members of departments of economics in New South Wales of Australia that homes some of World's Top 100 Universities.