Data Envelopment Analysis for Performance Evaluation: A Child’s Guide

Subhash Ray and Lei Chen
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Lei Chen: University of Connecticut, Postal: Department of Economics, University of Connecticut, Storrs CT 06269-1063, USA,

Indian Economic Review, 2010, vol. 45, issue 2, 79-124

Abstract: In this paper we offer a simple exposition of the neoclassical production theoretic foundations of Data Envelopment Analysis. The concepts of technical efficiency (both input- and output-oriented), scale efficiency, and cost efficiency are explained and the corresponding DEA models are described in details. We offer step-by-step instruction on how to write the codes for solving the various DEA models using the Solver option in the widely accessible MS Excel software. An important feature of this paper is a detailed exposition of how to write various Visual Basic Macro programs for solving DEA problems. We also describe the non-convex Free Disposal Hull (FDH) procedure and the secondstage regression analysis that seeks to account for variation in measured efficiency scores due to external factors.

Keywords: Efficiency; Linear Programming; Benchmarking; Excel Solver (search for similar items in EconPapers)
JEL-codes: C60 D02 (search for similar items in EconPapers)
Date: 2010
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