A generalized directional distance function in data envelopment analysis and its application to a cross-country measurement of health efficiency

Cheng, Gang and Zervopoulos, Panagiotis (2012): A generalized directional distance function in data envelopment analysis and its application to a cross-country measurement of health efficiency.

Abstract

Economic activity produces not only desirable outputs but also undesirable outputs that are usually called negative externalities in economic theory. Negative externalities are usually omitted from efficiency assessments (i.e., applications of Data Envelopment Analysis) which fail to express the true production process. In the present paper we develop a generalized directional distance function method for handling asymmetrically both desirable and undesirable outputs in the assessment process. Unlike the existing directional distance function-based approaches, the proposed method is units-invariant even in case assumptions for the direction vectors are relaxed. The new method is applied to data from national health systems of 160 countries. Desirable and undesirable outputs are incorporated to obtain a clear view of the efficiency status of the national health systems.

• Item Type: MPRA Paper
• Language: English
• Keywords: Data envelopment analysis; Directional distance function; Undesirable outputs; Units-invariant; Health systems
• Subjects: C - Mathematical and Quantitative Methods > C0 - General > C02 - Mathematical Methods; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity

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