A note on Sigma–Mu efficiency analysis as a methodology for evaluating units through composite indicators

Mike Tsionas

European Journal of Operational Research, 2020, vol. 286, issue 3, 1187-1196

Abstract: Recent research introduces a methodology for constructing composite indicators, called σ−μ efficiency analysis, illustrating its potential in a case study of world happiness. Building on the landmark research paper, we propose a novel model that allows statistical inference for both weights in the composite indicator as well as inefficiency, fully accounting for outliers in the data and unit-specific heterogeneity in weights. The new techniques are based on Bayesian analysis via Markov Chain Monte Carlo.

Keywords: Decision processes; Composite indicators; Sigma-Mu efficiency; Stochastic multi-attribute acceptability analysis; Bayesian analysis (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:286:y:2020:i:3:p:1187-1196

DOI: 10.1016/j.ejor.2020.03.076

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