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When, Where and How to Perform Efficiency Estimation

Oleg Badunenko (), Daniel Henderson () and Subal Kumbhakar ()

No 5997, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we compare two flexible estimators of technical efficiency in a cross-sectional setting: the nonparametric kernel SFA estimator of Fan, Li and Weersink (1996) to the nonparametric bias corrected DEA estimator of Kneip, Simar and Wilson (2008). We assess the finite sample performance of each estimator via Monte Carlo simulations and empirical examples. We find that the reliability of efficiency scores critically hinges upon the ratio of the variation in efficiency to the variation in noise. These results should be a valuable resource to both academic researchers and practitioners.

Keywords: technical efficiency; nonparametric kernel; bootstrap (search for similar items in EconPapers)
JEL-codes: C14 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2011-09
New Economics Papers: this item is included in nep-eff
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Published in: Journal of the Royal Statistical Society, Series A (Statistics in Society), 2012, 175 (4), 863-892

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Related works:
Journal Article: When, where and how to perform efficiency estimation (2012) Downloads
Working Paper: When, where and how to perform efficiency estimation (2011) Downloads
Working Paper: When, where and how to perform efficiency estimation (2011) Downloads
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