Categorical and continuous non-discretionary variables in data envelopment analysis: a comparison of two single-stage models

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dc.contributor.author Harrison, Julie en
dc.contributor.author Rouse, P en
dc.contributor.author Armstrong, J en
dc.date.accessioned 2012-03-29T23:26:56Z en
dc.date.issued 2012 en
dc.identifier.citation Journal of Productivity Analysis 37(3):261-276 2012 en
dc.identifier.issn 0895-562X en
dc.identifier.uri http://hdl.handle.net/2292/16143 en
dc.description.abstract Non-discretionary or environmental variables are regarded as important in the evaluation of efficiency in Data Envelopment Analysis (DEA), but there is no consensus on the correct treatment of these variables. This paper compares the performance of the standard BCC model as a base case with two single-stage models: the Banker and Morey (1986a) model, which incorporates continuous environmental variables and the Banker and Morey (1986b) model, which incorporates categorical environmental variables. Simulation analyses are conducted using a shifted Cobb-Douglas function, with one output, one non-discretionary input, and two discretionary inputs. The production function is constructed to separate environmental impact from managerial inefficiency, while providing measures of both for comparative purposes. Tests are performed to evaluate the accuracy of each model. The distribution of the inputs, the sample size and the number of categories for the categorical model are varied in the simulations to determine their impact on the performance of each model. The results show that the Banker and Morey models should be used in preference to the standard BCC model when the environmental impact is moderate to high. Both the continuous and categorical models perform equally well but the latter may be better suited to some applications with larger sample sizes. Even when the environmental impact is slight, the use of a simple two-way split of the sample data can produce significantly better results under the Categorical model in comparison to the BCC model. en
dc.publisher Springer en
dc.relation.ispartofseries Journal of Productivity Analysis en
dc.rights Items in ResearchSpace are protected by copyright, with all rights reserved, unless otherwise indicated. Previously published items are made available in accordance with the copyright policy of the publisher. Details obtained from http://www.sherpa.ac.uk/romeo/issn/0895-562X/ en
dc.rights.uri https://researchspace.auckland.ac.nz/docs/uoa-docs/rights.htm en
dc.title Categorical and continuous non-discretionary variables in data envelopment analysis: a comparison of two single-stage models en
dc.type Journal Article en
dc.identifier.doi 10.1007/s11123-011-0239-x en
pubs.issue 3 en
pubs.begin-page 261 en
pubs.volume 37 en
dc.rights.holder Copyright: Springer Science+Business Media, LLC en
pubs.end-page 276 en
dc.rights.accessrights http://purl.org/eprint/accessRights/RestrictedAccess en
pubs.subtype Article en
pubs.elements-id 282396 en
pubs.org-id Business and Economics en
pubs.org-id Graduate School of Management en
dc.identifier.eissn 1573-0441 en
pubs.record-created-at-source-date 2012-01-31 en


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