Incorporating heterogeneity in non-parametric models: a methodological comparison

DOI10.1504/IJOR.2010.035044MaRDI QIDQ604781zbMATH OpenOpenAlexFDO

Authors Kristof De Witte, R. C. Marques

Publication date 12 November 2010

Published in International Journal of Operational Research (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1504/ijor.2010.035044

zbMATH Keywords

data envelopment analysisDEAdrinking waterefficiency scoresenvironmental variablesFDHfree disposal hullheterogeneitymodellingnon-parametric modelswater industry

Mathematics Subject Classification ID

Applications of statistics to economics (62P20) Management decision making, including multiple objectives (90B50) Linear programming (90C05) Mixed integer programming (90C11) Environmental economics (natural resource models, harvesting, pollution, etc.) (91B76)

Review text

Summary: The operational environment can heavily influence the efficiency scores of the evaluated observations. If heterogeneity among entities is neglected, the efficiency evaluation is strongly biased. In this paper, we discuss five methodologies to incorporate heterogeneity in non-parametric frontier models which are robust for outlying observations. In particular, we examine the frontier separation approach, the all-in-one model, the two-stage model, the multi-stage approach and the conditional efficiency measures. We discuss their appropriateness on a simulated and a real-world drinking water data set. Although, the outcomes are closely related on average, the robust conditional efficiency procedure seems to be superior.

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• The impact of operating environment on efficiency of public libraries
• Efficiency assessment of primary care providers: a conditional nonparametric approach
• Treating unobserved heterogeneity in PLS path modeling: a comparison of FIMIX-PLS with different data analysis strategies
• Data envelopment analysis: a review and synthesis
• Malmquist productivity index from a regulator's perspective

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