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Data Envelopment Analysis for Performance Evaluation: A Child’s Guide

Author

Listed:
  • SUBHASH C. RAY

    (University of Connecticut)

  • LEI CHEN

    (University of Connecticut)

Abstract

In this paper we offer a simple exposition of the neoclassical production theoretic foundations of Data Envelopment Analysis. The concepts of technical efficiency (both input- and output-oriented), scale efficiency, and cost efficiency are explained and the corresponding DEA models are described in details. We offer step-by-step instruction on how to write the codes for solving the various DEA models using the Solver option in the widely accessible MS Excel software. An important feature of this paper is a detailed exposition of how to write various Visual Basic Macro programs for solving DEA problems. We also describe the non-convex Free Disposal Hull (FDH) procedure and the secondstage regression analysis that seeks to account for variation in measured efficiency scores due to external factors.

Suggested Citation

  • Subhash C. Ray & Lei Chen, 2010. "Data Envelopment Analysis for Performance Evaluation: A Child’s Guide," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 45(2), pages 79-124.
  • Handle: RePEc:dse:indecr:0024
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    Cited by:

    1. Giuseppe Coco & Raffaele Lagravinese & Giuliano Resce, 2020. "Beyond the weights: a multicriteria approach to evaluate inequality in education," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(4), pages 469-489, December.
    2. Maha Kalai, 2019. "Nonparametric Measures of Capacity Utilization of the Tunisian Manufacturing Industry: Short- and Long-Run Dual Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(1), pages 318-334, March.

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    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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