The economic meaning of Data Envelopment Analysis: A ‘behavioral’ perspective

Laurens Cherchye, Bram De Rock and Veerle Hennebel

Socio-Economic Planning Sciences, 2014, vol. 48, issue 1, 29-37

Abstract: We reconsider the motivation of Data Envelopment Analysis (DEA), the non-parametric technique that is widely employed for analyzing productive efficiency in academia, the private sector and the public sector. We first argue that the conventional engineering motivation of DEA can be problematic since it often builds on unverifiable production axioms. We then provide a dual viewpoint and highlight the ‘behavioral’ interpretation of DEA models. We start from a specification of the production objectives while imposing minimal structure on the production possibilities, and construct tools to meaningfully quantify deviations of observed producer behavior from optimizing behavior. This brings to light the economic meaning of DEA, provides guidelines for selecting the appropriate model in practical research settings, and prepares the ground for instituting new DEA models. We also provide an empirical application that demonstrates the practical relevance of our arguments. We hope that our insights will contribute to the further dissemination of DEA, and stimulate public sector applications of DEA that build on its behavioral interpretation.

Keywords: Non-parametric production analysis; Economic efficiency; DEA (search for similar items in EconPapers)
JEL-codes: C14 C61 D21 D24 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0038012113000670
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Economic Meaning of Data Envelopment Analysis: a "Behavioral" Perspective (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:soceps:v:48:y:2014:i:1:p:29-37

DOI: 10.1016/j.seps.2013.12.002

Access Statistics for this article

Socio-Economic Planning Sciences is currently edited by Barnett R. Parker

More articles in Socio-Economic Planning Sciences from Elsevier
Bibliographic data for series maintained by Catherine Liu ().