Abstract
We discuss modifications in the concept of efficiency that occur in Data Envelopment Analysis when best practice selection is subjected to additional constraints reflecting institutional circumstances, externalities, equity considerations or other extraneous information. Such additional constraints restrict the feasible production possibility set on the envelopment side problem. We provide an overview of constraints that may be present on the envelopment side; some of them mimic the well-known cone-ratio and assurance region models on the multiplier side problem. The discussion is mainly in terms of policy-based constraints that are external to the physical input-output relationships and instead reflect the institutional setting of the efficiency rankings, including considerations of the economic and social policy. A numerical example which rates the socio-economic performance of both developed and developing nations is provided to illustrate our model developments.
Similar content being viewed by others
References
D.L. Adolphson, G.C. Cornia and L.C. Walters, A unified framework for classifying DEA models, in: Operational Research '90, pp. 647–657.
R. Banker and R. Morey, The use of categorical variables in Data Envelopment Analysis, Management Science 32(1986)1613–1627.
R.J. Barro, Economic growth in a cross section of countries, The Quarterly Journal of Economics (1991)407–443.
A. Charnes and W.W. Cooper, Management Models and Industrial Applications of Linear Programming, Vol. 1, Wiley, New York, 1961.
A. Charnes and W.W. Cooper, Goal programming and multiple objective optimizations — Part I, European Journal of Operations Research 1(1977)39–54.
A. Charnes and W.W. Cooper, Preface to topics in Data Envelopment Analysis, Annals of Operations Research 2(1985)59–94.
A. Charnes, W.W. Cooper, B. Golany, L.M. Seiford and J. Stutz, Foundations of Data Envelopment Analysis for Pareto-Koopmans efficient empirical production functions, Journal of Econometrics 30(1985)91–107.
A. Charnes, W.W. Cooper and E. Rhodes, Measuring efficiency of decision making units, European Journal of Operational Research 2(1978)429–444.
A. Charnes, W.W. Cooper, J.J. Rousseau and A. Schinnar, A goal focusing approach to analysis of intergenerational transfers of income, International Journal of Systems Sciences 17(1986)433–446.
A. Charnes, W.W. Cooper and R. Thrall, Classifying and characterizing efficiencies and inefficiencies in Data Envelopment Analysis, Operations Research Letters 5(1986)105–110.
A. Charnes, W.W. Cooper, Q.L. Wei and Z.M. Huang, Cone-ratio Data Envelopment Analysis and multi-objective programming, International Journal of Systems Sciences 20(1989)1099–1118.
W.W. Cooper and A. Gallegos, DEA application to Latin American airlines, IC2 Working Paper, The University of Texas at Austin, 1992.
J.D. Divine, Efficiency analysis and management of not for profit and governmentally regulated organizations, Ph.D. Dissertation, University of Texas, Austin, TX, 1986.
D.D. Evanoff and P.R. Israilevich, Productive efficiency in banking, Economic Perspectives, Federal Reserve Bank of Chicago (1991) 11–32.
M.J. Farrell, The measurement of productive efficiency, Journal of the Royal Statistical Society A20(1957)253–281.
B. Golany, F.Y. Phillips and J.J. Rousseau, Models for improved effectiveness based on DEA efficiency results, IIE Transactions 25(1993)2–10.
B. Golany, Y. Roll and D. Rybak, Measuring efficiency of power plants in the Israeli Electric Corporation by Data Envelopment Analysis, IEEE Transactions on Engineering Management 41,no. 3 (1994)1–14.
B. Golany and Y. Roll, Incorporating standards in DEA, in: Data Envelopment Analysis: Theory, Methodology and Applications, A. Charnes, W.W. Cooper, A.Y. Lewin and L.M. Seiford, eds., Kluwer Academic, Boston, 1995.
B. Golany and E. Tamir, Evaluation of efficiency-effectiveness-equity trade-offs: A Data Envelopment Analysis approach, Management Science 41(1995)1172–1184.
B. Golany and S. Thore, On the treatment of negative outputs in DEA, IC2 Working Paper, The University of Texas at Austin, 1993.
B. Golany and S. Thore, The competitiveness of nations, to be published in IMPACT: How IC 2 Research Affects Public Policy and Business Markets, 1995.
K. Land, C.A.K. Lovell and S. Thore, Productive efficiency under capitalism and state socialism: An empirical inquiry using chance constrained Data Envelopment Analysis, Technological Forecasting and Social Change 46(1994)139–152.
C.A.K, Lovell, Measuring the macro-economic performance of the Taiwanese economy, Research Report, The University of Georgia, Athens, GA, January 1992.
C.A.K. Lovell and J.T. Pastor, Macro-economic performance of sixteen Ibero-American countries over the period 1980–1991, presented at the Georgia Productivity Conference, The University of Georgia, Athens, GA, October 1994.
Y. Roll and B. Golany, Alternate methods for treating factor weights in DEA, OMEGA 21(1993) 99–109.
E. Thanassoulis and R.G. Dyson, Estimating preferred target input output using Data Envelopment Analysis, European Journal of Operational Research 56(1992)80–97.
R.G. Thompson, L.N. Langemeier, C.T. Lee, E. Lee and R.M. Thrall, The role of multiplier bounds in efficiency analysis with application to Kansas farming, Journal of Econometrics 46(1990) 93–108.
S. Thore, Economic Logistics: The Optimization of Spatial and Sectoral Resource, Production and Distribution Systems, Quorum Books, Westport, CT, 1991.
Rights and permissions
About this article
Cite this article
Golany, B., Thore, S. Restricted best practice selection in DEA: An overview with a case study evaluating the socio-economic performance of nations. Annals of Operations Research 73, 117–140 (1997). https://doi.org/10.1023/A:1018916925568
Issue Date:
DOI: https://doi.org/10.1023/A:1018916925568