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Treating undesirable outputs in DEA: A critical review

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  • Halkos, George
  • Petrou, Kleoniki Natalia

Abstract

The treatment of undesirable outputs in Data Envelopment Analysis (DEA) has received great research attention recently. As such and as are presented in this work, there are four possible options to deal with those: 1. ignoring them from the production function, 2. treating them as regular inputs, 3. treating them as normal outputs and 4. performing necessary transformations to take them into account. Also new model propositions for their treatment are being presented. Each method brings with it, benefits and drawbacks which each researcher should take into account at every stage of their research and assesses which method is more appropriate to be used.

Suggested Citation

  • Halkos, George & Petrou, Kleoniki Natalia, 2019. "Treating undesirable outputs in DEA: A critical review," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 97-104.
  • Handle: RePEc:eee:ecanpo:v:62:y:2019:i:c:p:97-104
    DOI: 10.1016/j.eap.2019.01.005
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    More about this item

    Keywords

    Environmental efficiency; DEA; Undesirable outputs;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries

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