The Rise and Fall of Slacks: Comments on Quasi-Malmquist Productivity Indices

Finn Førsund

Journal of Productivity Analysis, 1998, vol. 10, issue 1, 34 pages

Abstract: The Malmquist productivity index has been based on ratios of radial Farrell efficiency scores. Calculating these relative to piecewise linear production frontiers slacks may appear, implying that the full magnitude of inefficiency is not revealed. Should the index rather be based on efficiency measures including slacks? Two arguments against are offered. Firstly, productivity calculation is different from efficiency calculation in the sense that the former compares actual data points while the latter expresses hypothetical productivity improvement. Secondly, slacks appear due to the “default rule” of using “inner bounds” of vertical and/or horizontal segments at the “edges” of the technology set. Copyright Kluwer Academic Publishers 1998

Keywords: Malmquist Productivity Index; Efficiency Measure; DEA; Slacks (search for similar items in EconPapers)
Date: 1998
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DOI: 10.1023/A:1018342214700

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