Directional Distances and their Robust versions. Computational and Testing Issues

Cinzia Daraio () and Leopold Simar
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Cinzia Daraio: Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"

No 2013-11, DIAG Technical Reports from Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"

Abstract: Directional distance functions provide very flexible tools for investigating the performance of Decision Making Units (DMUs). Their flexibility relies on their ability to handle undesirable outputs and to account for non-discretionary inputs and/or outputs by fixing zero values in some elements of the directional vector. Simar and Vanhems (2012) and Simar et al. (2012) indicate how the statistical properties of Farrell-Debreu type of radial efficiency measures can be transferred to directional distances. Moreover, robust versions of these distances are also available, for conditional and unconditional measures. B˘adin et al. (2012) have shown how conditional radial distances are useful to investigate the effect of environmental factors on the production process. In this paper we develop the operational aspects for computing conditional and unconditional directional distances and their robust versions, in particular when some of the elements of the directional vector are fixed at zero. After that, we show how the approach of B˘adin et al. (2012) can be adapted in a directional distance framework, including bandwidth selection and two-stage regression of conditional efficiency scores. Finally, we suggest a procedure, based on bootstrap techniques, for testing the significance of environmental factors on directional efficiency scores. The procedure is illustrated through simulated and real data.

Keywords: Directional Distances; Data Envelopment Analysis (DEA); Free Disposal Hull (FDH); Conditional efficiency measures; Nonparametric frontiers; Bootstrap (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-11
New Economics Papers: this item is included in nep-ecm and nep-eff
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http://www.dis.uniroma1.it/~bibdis/RePEc/aeg/report/2013-11.pdf Revised version, 2013 (application/pdf)

Related works:
Journal Article: Directional distances and their robust versions: Computational and testing issues (2014)
Working Paper: Directional distances and their robust versions: Computational and testing issues (2014)
Working Paper: Directional Distances and their Robust versions: Computational and Testing Issues (2013)
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