Distance Functions and Efficiency Measurement

Jesus Pastor and Juan Aparicio

Indian Economic Review, 2010, vol. 45, issue 2, 193-231

Abstract: In this survey we present, for the first time, a classification scheme for distance functions, considering two broad groups: the multiplicative and the additive distance functions. Guiding empirical work is one of the major objectives of this paper; for this reason we consider only linear distance functions within a Data Envelopment Analysis framework. This also constitutes an easy way of connecting distance functions and efficiency measures. Further, we introduce two classes of distance functions that have been recently defined: ratio-directional distance functions and loss distance functions. The former have opened the possibility of evaluating productivity change combining directional distance functions (additive in nature) with Malmquist indexes (multiplicative in nature). The latter unifies all the known linear distance functions under a common structure, allowing for the numerical evaluation of any linear distance function, as shown by a numerical example. We end with a revision of duality results so as to highlight the economic relevance of distance functions.

Keywords: Distance Functions; Data Envelopment Analysis; Efficiency Measures; Duality (search for similar items in EconPapers)
Date: 2010
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