A comparison of parametric and non-parametric efficiency measures: The case of Norwegian ferries

The trunk road system in Norway has to be supplemented by a number of ferries due to the long coastline with numerous islands and fjords. Most of the ferries are run by private companies, but at a loss. The deficit are covered by the Ministry of Transport. The subsidies have risen rapidly in the last years and have focussed attention on whether the ferries are really run as efficiently as possible. To change the incentives to economize, a lump-sum payment is considered. To implement such a system, an initial assessment of reasonable input requirements is needed. The aim of this article is to provide such a yardstick by establishing a best practice frontier. Both a non-parametric and a parametric approach to a deterministic frontier are tried and differences of results discussed. Peculiarities due to choice of methods are revealed. The efficiency distributions are quite similar for the two methods except for scale efficiency, where the parametric method indicates substantial unrealized scale economies, while the non-parametric approach shows the largest and some small ferries to be scale efficient. The results indicate a substantial rationalization potential of about 30 percent in total.I am indebted to three referees for forcing me to improve significantly the quality of the study. Any remaining shortcomings are, of course, my responsibility.     

Uncertainty and markets for renewable resources

The market allocation of renewable resources is examined when growth rates are affected by random disturbances. Given free access to a renewable resource, environmental disturbances are shown to affect the biological survival of the resource. The optimal solution is then examined and it is shown to be achieved by a competitive allocation when property rights are clearly defined given rational expectations or a complete set of contingent futures markets. The stochastic dynamics are shown in each case to differ considerably from the deterministic model.     

An empirical analysis of neural network memory structures for basin water quality forecasting

This research investigates the cumulative multi-period forecast accuracy of a diverse set of potential forecasting models for basin water quality management. The models are characterized by their short-term (memory by delay or memory by feedback) and long-term (linear or nonlinear) memory structures. The experiments are conducted as a series of forecast cycles, with a rolling origin of a constant fit size. The models are recalibrated with each cycle, and out-of-sample forecasts are generated for a five-period forecast horizon. The results confirm that the JENN and GMNN neural network models are generally more accurate than competitors for cumulative multi-period basin water quality prediction. For example, the JENN and GMNN models reduce the cumulative five-period forecast errors by as much as 50%, relative to exponential smoothing and ARIMA models. These findings are significant in view of the increasing social and economic consequences of basin water quality management, and have the potential for extention to other scientific, medical, and business applications where multi-period predictions of nonlinear time series are critical.     

The simulation of planning decisions

An approach to the simulation of planning decisions is presented in which techniques based on control systems analysis are used. Planning decisions are defined to be those taken by officially instituted bodies subsequent to the adoption of an official plan and in order to implement it. These decisions are in response to applications for action from the public. These decisions are assumed to be adequately represented by the mean and standard deviations of the distribution of time delays involved. These two parameters are in turn posited to be influenced by feedback, feedforward and comparison with a standard plan effects. These influences are subsumed in a Monitoring functional block, which is modelled by a set of multiple linear regression equations. The decision-making or Regulation functional block is represented by Laplace functions which makes it convenient for computer simulation. Input functions are derived from the hypothesis to be tested or theoretical considerations. The advantages of the method appear to lie in its concise form and ease of manipulation even though the system simulated is an adaptive control system. Computer simulation models are notorious for their unwieldy size (number of equations) which in turn makes intervention and manipulation of parameters impractical. The proposed model attempts to alleviate this problem by simplifying the procedure involved.     

Forecasting returns in the VIX futures market

This paper introduces a new forecasting model for VIX futures returns. The model is structural in nature and parsimonious, and contains parameters that are relatively easy to estimate. The forecasts of next day VIX futures returns based on this model are superior to those produced by a linear forecasting model that uses the same set of predictors. Moreover, the profits to a market-timing model based on the proposed forecasts are statistically and economically significant, and are robust to both the method used for adjusting for risk and transaction costs (up to around 15 basis points). In contrast, the forecasts generated by the linear forecasting model are not.     

The impact of interest subsidies on the inter- regional allocation of capital: An econometric analysis for Belgium

Regionally differentiated interest rate subsidies are assumed to have on theoretical grounds both a generative and a redistributive impact on investment. In the conventional econometric approach, these effects are captured by the interest rate parameters that appear in regional investment functions which are usually estimated by single equation methods. This paper focusses on the redistributive impact of regional interest subsidies. The theoretical framework choosen for the analysis is that of a multiregional firm that maximizes overall profits subject to a capital cost constraint. The resulting allocation model for capital stock is similar to a system of consumer demand equations. It is estimated by a maximum likelihood method. The empirical results indicate that the redistributive effects of interest rate subsidies are significant.     

Market structure,common ownership,and coordinated manager compensation

We study oligopolistic competition in product markets where the firms' quantity decisions are delegated to managers. Some firms are commonly owned by shareholders such as index funds, whereas the other firms are owned by independent shareholders. Under such an asymmetric ownership structure, the common owners have an incentive to coordinate when designing the manager compensation schemes. This implicit collusion induces a less aggressive output behavior by the coordinated firms and a more aggressive behavior by the noncoordinated firms. The profits of the noncoordinated firms are increasing in the number of coordinated firms. The profits of the coordinated firms exceed the profits without coordination if at least 80% of the firms are commonly owned.     

How do quotes and prices evolve around isolated informed trades?

This article investigates the order imbalance and price behavior of trades and quotes around isolated informed trades intraday. Different patterns of order flows around informed trades are documented because of the originating stock exchange, the type of informed trader, the size of the order, and the type of the firm whose shares are traded. The informed trader acts contrarian to prior trades. Informed purchases follow price declines, and sales are after price increases. The informed trade is recognized by the market maker. The purchase is executed at a significantly higher price, while the sale is executed at a significantly lower price. Trades contain more information if the insiders are at small firms. Larger orders and orders by top executives also contain more information. The order imbalance changes around an informed trade. Orders are seller-initiated prior to the purchase and become buyer-initiated after the trade. On the other hand, the order imbalance changes from buyer- to seller-initiated right around insider sales. Reversals in order imbalance are more pronounced for informed trades in small firms, for larger trades, and by top executives. There are important policy implications of the results. The recognition of informed trades by market makers justifies more scrutiny by the Securities and Exchange Commission in order to ensure fair trading.     

Some general results for moments in bivariate distributions

The purpose of this paper is to present a closed formula to compute the moments of a general function from the knowledge of its bivariate survival function. The result is derived by utilizing an integration by parts formula for two variables, which is not readily available in the literature. Many of the existing results are obtained as special cases. Finally, two examples are presented to illustrate the results. In both the examples, mixed moments as well as moments for the series system and parallel system are obtained. The integration by parts formula in two variables, derived here, is of interest in its own right and we hope that it will be useful in other investigations. The integration by parts formula in two variables is derived as a special case of a general formula in n variables.     

How responsive are charities to market needs?

Voluntary organisations have a unique set of stakeholders. Their services are paid for, not by their customers, but by ‘purchasers’ such as social services or grant-making trusts. This separation of customers from purchasers denies voluntary organisations a direct market mechanism for feedback on their services. As a result, charities are in danger of providing outdated poor-quality services for years, while convincing purchasers that they are still doing a good job. This paper examines the extent to which voluntary organisations do in fact respond to market needs, despite their undemanding environment. The paper draws on research from 15 national disability charities to explore the extent to which charities are market orientated, and to identify examples of best practice in the field. The paper concludes by identifying the critical role played by charity chief executives in urging their own organisations to adopt marketing principles. Copyright © 1999 Henry Stewart Publications     

Linkage Disequilibrium Mapping of Disease Susceptibility Genes in Human Populations

The paper reviews recent work on statistical methods for using linkage disequilibrium to locate disease susceptibility genes, given a set of marker genes at known positions in the genome. The paper starts by considering a simple deterministic model for linkage disequilibrium and discusses recent attempts to elaborate it to include the effects of stochastic influences, of "drift", by the use of either Writht-Fisher models or by approaches based on the coalescence of the genealogy of the sample of disease chromosomes. Most of this first part of the paper concerns a series of diallelic markers and, in this case, the models so far proposed are hierarchical probability models for multivariate binary data. Likelihoods are intractable and most approaches to linkage disequilibrium mapping amount to marginal models for pairwise associations between individual markers and the disease susceptibility locus. Approaches to evalutation of a full likelihood require Monte Carlo methods in order to integrate over the large number of unknowns. The fact that the initial state of the stochastic process which has led to present-day allele frequencies is unknown is noted and its implications for the hierarchical probability model is discussed. Difficulties and opportunities arising as a result of more polymorphic markers and extended marker haplotypes are indicated. Connections between the hierarchical modelling approach and methods based upon identity by descent and haplotype sharing by seemingly unrelated case are explored. Finally problems resulting from unknown modes of inheritance, incomplete penetrance, and "phenocopies" are briefly reviewed.     

Model for planning the location and size of urban schools

This paper describes a model to be used in the evaluation of educational policy relative to the location and concentration of school plants within an urban environment. The model attempts to consider these decisions in terms of the broad factors that determine the effectiveness of these decisions, and is therefore highly aggregate. Several submodels are described, the urban submodel, the school submodel, the effectiveness submodel and the cost submodel. The urban submodel is described by area units which are defined by their location and their socioeconomic characteristics. The school submodel is described by functional classifications of school plant space requirements and personnel staffing ratios. The effectiveness submodel is described by measures of achievement and the racial and socioeconomic composition of the school attendance area. The cost submodel is described by initial capital and operating cost estimates of the school system. The operational measures that are the output of the above two submodels are used as a quantitative basis for the selection among alternate policies. No attempt is made to maximize these decisions relative to a defined utility function.     

Factors influencing processes of radical change in organizational belief systems

The recent development of a cognitive, interpretive approach to organizational analysis has helped to increase our understanding of organizational action. This paper discusses the relationship between organizational beliefs and organizational change. Based upon a review of empirical studies of strategic reorientations, the article presents a model of factors that influence processes which lead to changes in organizational belief systems. It is argued that radical changes in organizational belief systems are influenced by organizational results, by characteristics of the organizational environment, by intra-organizational factors, and by characteristics of the current organizational belief systems. These factors are discussed and some ways to further augment our knowledge of this phenomenon are indicated.     

Slack-adjusted efficiency measures and ranking of efficient units

In non-parametric methods many units are calculated as efficient. The article suggests a method for ranking efficient units, not by their efficiency, but by importance as benchmarks for the inefficient units, in contrast to earlier suggestions in the literature which rank units high if they are specialized. However, the total potentials for improvement frequently remain unrevealed by calculating radial efficiency measures of the Farrell type only. The article therefore first develops efficiency measures that explicitly extend the radial measures to include slacks. The new measures are applied to a typical multidimensional small-sample data set for Norwegian employment offices.     

Intra-urban journeys and activity linkages

Data from a travel diary study of Watford residents are used to examine the linkages between successive stages of multi-stage journeys. The linkage patterns in the journeys made each day by housewives and by other adults are described. A simple model of the number of stages to which journeys are extended is presented. The numbers of journeys made each week by various population sub-groups are also described. Some implications for planning and transport prediction are discussed.     

Optimal age- and sex-based management of the queue to ventilators during the Covid-19 crisis

Triage protocols for intensive care units are based on priorities assigned to presents, but ignore patients about to arrive, so a priority newcomer may not find a ventilator and its associated nursing staff available because they are occupied by a lower-priority patient who however was present at the moment of assignment. Conversely, waiting too long leads to losing elderly patients who could have been saved by ventilators. As age and sex are major determinants of mortality by Covid-19 and have the merit, in contrast to other priority criteria, of being immediately available to health professionals, the criterion is the minimization of the mean mortality rate weighted by age- and sex-specific life expectancies. The dynamics is a queuing process involving mortality and return home flows and competition between ages. The result is the determination of an optimal threshold age that can guide triage.     

Weighted rank statistics in factorial designs with fixed effects

Nonparametric methods for the analysis of factorial designs with two fixed factors are considered. The sample sizes may be unequal and the distribution functions are not assumed to be continuous. Nonparametric hypotheses for the main effects and for the interaction are tested by ranking procedures where the statistics are weighted according to the different sample sizes within the levels of one factor. Simulations show that the approximations by the limiting normal distribution and by the t - and F -distributions are quite accurate if the samples sizes within the cells are at least 7 for all treatment combinations. Moreover, it turns out that the power for the weighted statistics is much higher than for the unweighted statistics. The application of the suggested procedures is demonstrated by the analysis of a data set from a clinical trial with ordered categorical data.     

Composition versus decomposition in two-stage network DEA: a reverse approach

A two-stage production process assumes that the first stage transforms external inputs to a number of intermediate measures, which then are used as inputs to the second stage that produces the final outputs. The fundamental approaches to two-stage network data envelopment analysis are the multiplicative and the additive efficiency-decomposition approaches. Both they assume a series relationship between the two stages but they differ in the definition of the overall system efficiency as well as in the way they conceptualize the decomposition of the overall efficiency to the efficiencies of the individual stages. In this paper, we first show that the efficiency estimates obtained by the additive decomposition method are biased, by unduly favouring one stage against the other, while those obtained by the multiplicative method are not unique. Then, we present a novel approach to estimate unique and unbiased efficiency scores for the individual stages, which are then composed to obtain the efficiency of the overall system, by selecting the aggregation method a posteriori. Within the particularity of two-stage processes emerging from the conflicting role of the intermediate measures, we develop an envelopment model to locate the efficient frontier whose derivation from our primal multiplier efficiency assessment model is effectively justified. The results derived from our approach are compared with those obtained by the aforementioned basic methods on experimental data as well as on test data drawn from the literature. Similarities and dissimilarities in the results are rigorously justified.     

Technical efficiency of Norwegian banks: The non-parametric approach to efficiency measurement

The nonparametric frontier methodology is applied to a sample of banks, where output levels are measured either by the number of accounts and their average size, or by the total balances of the accounts. The efficiency rankings of individual banks are found to depend substantially on our choice of output metric, whereas the estimated size of potential productivity improvements in the banking sector are less affected. The results on economies of scale are also largely unchanged.The refereeing process of this paper was handled through S. Grosskopf.     

Workplace Bullying In Academia: A Canadian Study

This paper examines the results of a workplace bully survey sent to faculty, instructors and librarians at a mid-sized Canadian university in 2005. The potential sources of workplace bullying by colleagues, administrators and students are examined. The survey determined that workplace bullying is of particular concern for employees that are newly hired or untenured. The systemic nature of this phenomenon and the spillover effect from one job domain to another are identified. The findings indicate costs for the university linked to workplace bullying. Costs include increased employee turnover, changed perception of the university by employees and reduced employee engagement.