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Blaming the exogenous environment? Conditional efficiency estimation with continuous and discrete environmental variables

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  • Kristof DE WITTE
  • Mika KORTELAINEN

Abstract

This paper proposes a fully nonparametric framework to estimate relative efficiency of entities while accounting for a mixed set of continuous and discrete (both ordered and unordered) exogenous variables. Using robust partial frontier techniques, the probabilistic and conditional characterization of the production process, as well as insights from the recent developments in nonparametric econometrics, we present a generalized approach for conditional efficiency measurement. To do so, we utilize a tailored mixed kernel function with a data-driven bandwidth selection. So far only descriptive analysis for studying the effect of heterogeneity in conditional efficiency estimation has been suggested. We show how to use and interpret nonparametric bootstrap-based significance tests in a generalized conditional efficiency framework. This allows us to study statistical significance of continuous and discrete environmental variables. The proposed approach is illustrated by a sample of British pupils from the OECD Pisa data set. The results show that several exogenous discrete factors have a significant effect on the educational process.

Suggested Citation

  • Kristof DE WITTE & Mika KORTELAINEN, 2008. "Blaming the exogenous environment? Conditional efficiency estimation with continuous and discrete environmental variables," Working Papers Department of Economics ces0833, KU Leuven, Faculty of Economics and Business, Department of Economics.
  • Handle: RePEc:ete:ceswps:ces0833
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    Cited by:

    1. De Witte, K. & Rogge, N., 2009. "Accounting for exogenous influences in a benevolent performance evaluation of teachers," Working Papers 15, Top Institute for Evidence Based Education Research.
    2. K. De Witte & M. Verschelde, 2010. "Estimating and explaining efficiency in a multilevel setting: A robust two-stage approach," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 10/657, Ghent University, Faculty of Economics and Business Administration.
    3. Rogge, Nicky, 2009. "Granting teachers the 'benefit of the doubt' in performance evaluations," Working Papers 2009/17, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    4. Rogge, Nicky, 2009. "Robust benevolent evaluations of teaching performance," Working Papers 2009/21, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    5. Kristof De Witte & Chris Van Klaveren, 2014. "How are teachers teaching? A nonparametric approach," Education Economics, Taylor & Francis Journals, vol. 22(1), pages 3-23, February.
    6. Rogge, Nicky & De Witte, Kristof, 2009. "To publish or not to publish? On the aggregation and drivers of research performance," Working Papers 2009/42, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    7. De Witte, Kristof & Mika, Kortelainen, 2009. "Blaming the exogenous environment? Conditional efficiency estimation with continuous and discrete exogenous variables," MPRA Paper 14034, University Library of Munich, Germany.
    8. Sofia KOURTESI & Panos FOUSEKIS & Apostolos POLYMEROS, 2012. "Conditional Efficiency Estimation With Environmental Variables: Evidence From Greek Cereal Farms," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 11(1), pages 43-52.
    9. Witte, Kristof De & Geys, Benny, 2011. "Evaluating efficient public good provision: Theory and evidence from a generalised conditional efficiency model for public libraries," Journal of Urban Economics, Elsevier, vol. 69(3), pages 319-327, May.

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