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A Bootstrap-Regression Procedure to Capture Unit Specific Effects In Data Envelopment Analysis

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Author Info

  • Evangelia Desli

    (Lloyd’¡Çs of London, London EC3M 7HA, UK.)

  • Subhash C. Ray

    (University of Connecticut, Storrs CT 06269-1063, USA.)

Abstract

The Data Envelopment Analysis (DEA) efficiency score obtained for an individual firm is a point estimate without any confidence interval around it. In recent years, researchers have resorted to bootstrapping in order to generate empirical distributions of efficiency scores. This procedure assumes that all firms have the same probability of getting an efficiency score from any specified interval within the [0,1] range. We propose a bootstrap procedure that empirically generates the conditional distribution of efficiency for each individual firm given systematic factors that influence its efficiency. Instead of resampling directly from the pooled DEA scores, we first regress these scores on a set of explanatory variables not included at the DEA stage and bootstrap the residuals from this regression. These pseudo-efficiency scores incorporate the systematic effects of unit-specific factors along with the contribution of the randomly drawn residual. Data from the U.S. airline industry are utilized in an empirical application.

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Bibliographic Info

Article provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.

Volume (Year): 39 (2004)
Issue (Month): 1 (January)
Pages: 89-110

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Handle: RePEc:dse:indecr:v:39:y:2004:i:1:p:89-110

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Related research

Keywords: DEA; Kernel Smoothing; Reflection Method; Empirical Density;

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References

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  1. Simar, L., 1991. "Estimating efficiencies from frontier models with panel data: a comparison of parametric, non-parametric and semi-parametric methods with boot strapping," CORE Discussion Papers 1991026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. SIMAR , Léopold, 1995. "Aspects of Statistical Analysis in DEA-Type Frontier Models," CORE Discussion Papers 1995061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Simar, L. & Wilson, P.W., . "Sensitivity analysis of efficiency scores: how to bootstrap in nonparametric frontier models," CORE Discussion Papers RP -1304, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
  5. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  6. Simar, L. & Wilson, P.W., 1998. "A General Methodology for Bootstrapping in Nonparametric Frontier Models," Papers 9811, Catholique de Louvain - Institut de statistique.
  7. Subhash C. Ray, 1991. "Resource-Use Efficiency in Public Schools: A Study of Connecticut Data," Management Science, INFORMS, vol. 37(12), pages 1620-1628, December.
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Citations

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Cited by:
  1. Greer, Mark, 2009. "Is it the labor unions' fault? Dissecting the causes of the impaired technical efficiencies of the legacy carriers in the United States," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 779-789, November.
  2. Greer, Mark R., 2008. "Nothing focuses the mind on productivity quite like the fear of liquidation: Changes in airline productivity in the United States, 2000-2004," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(2), pages 414-426, February.
  3. Mainak Mazumdar & Meenakshi Rajeev & Subhash Ray, 2011. "Sources of Heterogeneity in the Efficiency of Indian Pharmaceutical Firms," Working papers 2011-22, University of Connecticut, Department of Economics.
  4. Rajitkanok Puenpatom & Robert Rosenman, 2008. "Efficiency of Thai provincial public hospitals during the introduction of universal health coverage using capitation," Health Care Management Science, Springer, vol. 11(4), pages 319-338, December.

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