Measuring Cost Efficiency in European Banking: A Comparison of Frontier Techniques

This paper investigates the consistency of efficiency frontier methods on European banking samples. We measure the cost efficiency of banks from five European countries (France, Germany, Italy, Spain, Switzerland) with three approaches: stochastic frontier approach, distribution-free approach, and data envelopment analysis. We compare means, correlation coefficients, two public policy issues, and the correlation with standard measures of performance. In general, we conclude in favor of the lack of robustness between approaches, even if there are some similarities in particular between parametric approaches. We do, however, observe some correlation between all frontier approaches and standard measures of performance.     

On the Role of Weight Restrictions in Data Envelopment Analysis

This paper examines the role that weight restrictions play in Data Envelopment Analysis (DEA). It is argued that the decision to include a factor (input or output) in a DEA model represents an implicit judgement that the factor has a non-trivial weight. It therefore seems perverse to allow DEA to assign a trivial weight to that factor in assessing the efficiency of a unit. There is therefore a strong case for imposing restrictions on factor weights. However, many existing methods of weight restriction are in practice unwieldy. This paper proposes an alternative approach we term contingent weight restriction which is both practical and intellectually consistent with the DEA philosophy. The paper explores the implications of alternative methods of weight restriction using simulated data from a well known production process.     

The Use of Data Envelopment Analysis with Probabilistic Assurance Regions for Measuring Hospital Efficiency

This paper uses Data Envelopment Analysis (DEA) for an estimation of the cost efficiency of 70 Danish hospitals. The analysis relates to a cost function based on 483 outputs in combination with a set of probabilistic assurance regions defined by the cost distributions for each output. It is demonstrated that the probabilistic assurance region approach allows for (i) a frontier estimation in the full output space, i.e., no fixed aggregation is required, and (ii) a controlling of the variation in heterogeneity of the output clusters, in casu Diagnosis Related Groups. The likelihood of the estimated efficiency score for a given hospital can be measured based on the sensitivity of the score w.r.t. the probability levels used in the specification of confidence intervals for the probabilistic assurance regions.     

Input- and Output-Oriented Technical Efficiency of Ukrainian Collective Farms, 1989–1992: Bayesian Analysis of a Stochastic Production Frontier Model

We propose estimation of a stochastic production frontier model within a Bayesian framework to obtain the posterior distribution of single-input-oriented technical efficiency at the firm level. All computations are carried out using Markov chain Monte Carlo methods. The approach is illustrated by applying it to production data obtained from a survey of Ukrainian collective farms. We show that looking at the changes in single-input-oriented technical efficiency in addition to the changes in output-oriented technical efficiency improves the understanding of the dynamics of technical efficiency over the first years of transition in the former Soviet Union.     

Measurement of Dynamic Efficiency in Production: An Application of Data Envelopment Analysis to Japanese Electric Utilities

The purpose of this paper is to measure productive efficiencies when a firm employs quasi-fixed inputs that cannot be instantaneously adjusted to their optimal levels. To this end, data envelopment analysis (DEA) is extended to a dynamic framework so that investment behavior can be modelled with the efficient production frontier. Based on the work of Nemoto and Goto (1999), we show how the efficiencies of quasi-fixed inputs and their adjustment processes are evaluated. An application to Japanese electric utilities over the 1981–1995 period delivers empirically plausible results and proves the usefulness of the procedure.     

Testing Independence in Models of Productive Efficiency

Bootstrap methods for inference in nonparametric models of productive efficiency can be simplified, reducing computational burden, when the independence condition implicitly assumed in Simar and Wilson (1998) holds. This paper surveys nonparametric tests of independence that might be useful in this context.     

Nonparametric Efficiency Analysis under Price Uncertainty: A First-Order Stochastic Dominance Approach

This paper extends the nonparametric approach to efficiency analysis to deal with uncertainty of input-output prices. We generalize the notion of economic efficiency to derive necessary and sufficient first-order stochastic dominance (FSD) efficiency conditions. Interestingly, the FSD conditions include as limiting cases the traditional conditions for economic efficiency and technical efficiency. Furthermore, we propose empirical tests for these FSD conditions, which require minimal assumptions concerning the preferences of the decision-maker and the statistical distribution of the prices. From operational point of view, the FSD conditions can be tested empirically using standard mathematical programming techniques. An empirical application to the Dutch electricity distribution sector illustrates the approach.     

Relative Performance of U.S. and Japanese Electricity Distribution: An Application of Stochastic Frontier Analysis

This paper estimates and compares the technical efficiency of the U.S. and Japanese electric utilities during the period 1982–1997 using a stochastic frontier analysis. Our focus is on electricity distribution services of major investor-owned utilities. We employ translog input distance functions to represent the technology of electricity distribution. Empirical results show that after controlling for environmental variables, on average, the Japanese electric utilities are more efficient. It is shown, however, that some U.S. utilities are as efficient as the most efficient Japanese utilities, indicating that the estimated frontier is not necessarily dominated by Japanese utilities.An erratum to this article can be found at     

Lower Bound Restrictions on Intensities in Data Envelopment Analysis

We propose an extension to the basic DEA models that guarantees that if an intensity is positive then it must be at least as large as a pre-defined lower bound. This requirement adds an integer programming constraint known within Operations Research as a Fixed-Charge (FC) type of constraint. Accordingly, we term the new model DEA_FC. The proposed model lies between the DEA models that allow units to be scaled arbitrarily low, and the Free Disposal Hull model that allows no scaling. We analyze 18 datasets from the literature to demonstrate that sufficiently low intensities—those for which the scaled Decision-Making Unit (DMU) has inputs and outputs that lie below the minimum values observed—are pervasive, and that the new model ensures fairer comparisons without sacrificing the required discriminating power. We explain why the low-intensity phenomenon exists. In sharp contrast to standard DEA models we demonstrate via examples that an inefficient DMU may play a pivotal role in determining the technology. We also propose a goal programming model that determines how deviations from the lower bounds affect efficiency, which we term the trade-off between the deviation gap and the efficiency gap.     

Efficiency Gains and Cost Reductions from Individual Transferable Quotas: A Stochastic Cost Frontier for the Australian South East Fishery

In this paper efficiency gains and associated cost reductions from increases in traded quota are estimated with a stochastic cost frontier for the Australian South East Trawl Fishery (SETF). Estimation of this frontier also provides key information on the relative importance of input costs in the SETF, returns to scale, variations in costs as a result of trade in quota and the economic performance of each fishing vessel, year to year. Final estimations indicate that increases in the volume of quota traded have resulted in considerable efficiency gains and cost reductions in the SETF, ranging from 1.8 to 3.5 cents per kilogram for surveyed vessels for every 1% increase in the volume of quota traded, or 1–2.4% of total variable costs, with considerable gains also accruing to crew and skipper in the form of larger share payments. Mean vessel efficiency is relatively high in the SETF, estimated at over 90%, and increases further to 92% over the sample period with increased trades in quota.Jel Classification: Q22, Q28     

Sensitivity and stability of efficiency classifications in Data Envelopment Analysis

A new technique for assessing the sensitivity and stability of efficiency classifications in Data Envelopment Analysis (DEA) is presented. Here developed for the ratio (CCR) model, this technique extends easily to other DEA variants. An organization's input-outut vector serves as the center for a cell within which the organization's classification remains unchanged under perturbations of the data. For the l ₁, l and generalized l norms, the radius of the maximal cell can be computed using linear programming formulations. This radius can be interpreted as a measure of the classification's stability, especially with respect to errors in the data.Abraham Charnes passed away December 19, 1992.     

DEA, DFA and SFA: A comparison

The nonparametric data envelopment analysis (DEA) model has become increasingly popular in the analysis of productive efficiency, and the number of empirical applications is now very large. Recent theoretical and mathematical research has also contributed to a deeper understanding of the seemingly simple but inherently complex DEA model. Less effort has, however, been directed toward comparisons between DEA and other competing efficiency analysis models. This paper undertakes a comparison of the DEA, the deterministic parametric (DFA), and the stochastic frontier (SFA) models. Efficiency comparisons across models in the above categories are done based on 15 Colombian cement plants observed during 1968–1988.     

基于偏好DEA模型的区域高等教育资源配置结构效益评价

资源配置结构合理与否,直接关系到区域高等教育系统整体的规模、质量和效益。本文按照评价对象群体公认的合理的资源配置结构标准,对评价指标权重加以约束,利用带偏好锥的DEA模型评价了我国31个省市区高等教育资源配置的结构效益,系统分析了现阶段我国各省市区高等教育资源配置结构方面的薄弱环节。这对于优化区域高等教育资源配置结构、提升区域高等教育竞争力具有重要的实践价值。     

数据包络分析在企业盈利能力评价中的应用

本文是基于数据包络分析(DEA)模型对房地产上市公司盈利能力的分析。并从综合效率,规模效率,技术效率,规模报酬四个方面对房地产进行综合评价。     

Full Likelihood Inference in Normal-Gamma Stochastic Frontier Models

The paper takes up inference in the stochastic frontier model with gamma distributed inefficiency terms, without restricting the gamma distribution to known integer values of its shape parameter (the Erlang form). The paper shows that Gibbs sampling with data augmentation can be used in a computationally efficient way to explore the posterior distribution of the model and conduct inference regarding parameters as well as functions of interest related to technical inefficiency.     

DEA在仓库运作管理中的应用

数据包络分析能对决策单元的有效性进行评价。本文应用数据包络分析的C2R模型,对仓库的运作效率进行研究。选取某部的8个备件仓库为样本,基于C2R模型计算结果,得到一些有价值的仓库运作管理方面的信息。     

On the Origins of Data Envelopment Analysis

The concept Data Envelopment Analysis (DEA) was introduced in the journal literature by the highly influential 1978 paper of Charnes, Cooper, and Rhodes. In the subsequent literature the development of research leading up to this paper tended to be forgotten. However, studying this diffusion of ideas may give valuable insights into research issues still unexplored and insight in the research process itself. A natural starting point is Farrell's seminal 1957 paper on concepts of efficiency and their computation. The richness of ideas presented in Farrell is demonstrated by the fact that the developments in the following two decades were based on aspects and ideas there. The origins of the main developments are identified, and the connections to Charnes, Cooper, and Rhodes are explored.     

基于DEA模型的企业员工绩效考评研究

利用数据包络分析(DEA)方法对企业员工进行绩效考评,目的是真实、客观地反映员工的工作表现。本文提出运用只有输出(输入)和二次相对有效性的DEA模型对企业员工进行静态与动态的绩效考评,并结合实例进行实证研究,为人力资源管理提供了有价值的方法。     

Fixed and Random Effects in Stochastic Frontier Models

Received stochastic frontier analyses with panel data have relied on traditional fixed and random effects models. We propose extensions that circumvent two shortcomings of these approaches. The conventional panel data estimators assume that technical or cost inefficiency is time invariant. Second, the fixed and random effects estimators force any time invariant cross unit heterogeneity into the same term that is being used to capture the inefficiency. Inefficiency measures in these models may be picking up heterogeneity in addition to or even instead of inefficiency. A fixed effects model is extended to the stochastic frontier model using results that specifically employ the nonlinear specification. The random effects model is reformulated as a special case of the random parameters model. The techniques are illustrated in applications to the U.S. banking industry and a cross country comparison of the efficiency of health care delivery.JEL classification: C1, C4     

基于前沿生产函数的黑龙江省煤炭城市的技术效率研究

本论文针对黑龙江省经济增长数量很大但经济增长质量不高的现状,采用随机前沿方法,分析了黑龙江省4个煤炭城市10年的技术效率。结果表明,黑龙江省各煤炭城市的技术效率普遍不高,但都呈现稳步上升的趋势。在要素投入不变的情况下,改变经济增长方式,提高技术效率水平,将成为黑龙江省今后经济发展的一个重要方向。