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SIMARWILSON: Stata module to perform Simar & Wilson (2007) efficiency analysis

Author

Listed:
  • Oleg Badunenko

    () (University of Portsmouth)

  • Harald Tauchmann

    () (Friedrich-Alexander-Universität Erlangen-Nürnberg)

Abstract

simarwilson implements the procedures proposed by Simar and Wilson (2007) for regression analysis of DEA (data envelopment analysis) efficiency scores. Unlike naive two-step approaches, the Simar and Wilson procedure accounts for (i) DEA efficiency scores being bounded - depending on how inefficiency is defined - from above or from below at the value of one, and (ii) for DEA generating a complex and generally unknown correlation pattern among estimated efficiency scores. In technical terms a multi-step procedure is pursued that involves (i) estimation of a radial measure of technical efficiency, (ii) truncated regression analysis, (iii) simulating the unknown error correlation, and (iv) calculating bootstrap standard errors and CIs. From a purely technical perspective, one may interpret simarwilson as a procedure for correcting the standard errors one gets from using truncreg for regressing DEA scores on explanatory variables. Simar and Wilson (2007) propose two algorithms (alg. #1 and alg. #2) that differ in either using uncorrected (alg. #1) or bias-corrected (alg. #2) efficiency scores. Both algorithms are implemented. simarwilson allows for either using externally estimated DEA scores (spec. depvar) or for internally conducting the DEA (sepc. (outputs = inputs)). For the latter simarwilson requires the user-written command teradial (Badunenko and Mozharovskyi, 2016). Note that the procedure for bias correction suggested in Simar & Wilson (2007) - though similar - deviates from what is implemented in the user-written program teradialbc (Badunenko and Mozharovskyi, 2016) and is closely linked to the regression analysis on the second stage of the procedure. For this reason, it is recommended not to use externally estimated scores, if one wants to apply algorithm #2.

Suggested Citation

  • Oleg Badunenko & Harald Tauchmann, 2016. "SIMARWILSON: Stata module to perform Simar & Wilson (2007) efficiency analysis," Statistical Software Components S458156, Boston College Department of Economics, revised 30 Nov 2017.
  • Handle: RePEc:boc:bocode:s458156 Note: This module should be installed from within Stata by typing "ssc install simarwilson". Windows users should not attempt to download these files with a web browser.
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    File URL: http://fmwww.bc.edu/repec/bocode/s/simarwilson.ado
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    File URL: http://fmwww.bc.edu/repec/bocode/s/simarwilson.sthlp
    File Function: help file
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