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Event-specific Data Envelopment Models and Efficiency Analysis

Author

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  • Robert G. Chambers

    (Dept of Agricultural and Resource Economics, University of Maryland, College Park)

  • Atakelty Hailu

    (School of Agricultural and Resource Economics, The University of Western Australia,)

  • John Quiggin

    (Department of Economics, University of Queensland)

Abstract

Most, if not all, production technologies are stochastic. This article demonstrates how data envelopment analysis (DEA) methods can be adapted to accommodate stochastic elements in a state-contingent setting. Specifically, we show how observations on a random input, not under the control of the producer and not known at the time that variable input decisions are made, can be used to partition the state space in a fashion that permits DEA models to approximate an event-specific production technology. The approach proposed in this article uses observed data on random inputs and is easy to implement. After developing the event-specific DEA representation, we apply it to a data set for Western Australian wheat farmers. Our results highlight the need for acknowledging stochastic elements in efficiency analysis.

Suggested Citation

  • Robert G. Chambers & Atakelty Hailu & John Quiggin, 2007. "Event-specific Data Envelopment Models and Efficiency Analysis," Risk & Uncertainty Working Papers WPR07_8, Risk and Sustainable Management Group, University of Queensland.
    • Handle: RePEc:rsm:riskun:r07_8
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    File URL: http://www.uq.edu.au/rsmg/WP/WPR07_08.pdf
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    References listed on IDEAS

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    1. Léopold Simar & Paul Wilson, 2000. "Statistical Inference in Nonparametric Frontier Models: The State of the Art," Journal of Productivity Analysis, Springer, vol. 13(1), pages 49-78, January.
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    3. Quirino Paris, 1992. "The von Liebig Hypothesis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(4), pages 1019-1028.
    4. John Quiggin & David Adamson & Sarah Chambers & Peggy Schrobback, 2010. "Climate Change, Uncertainty, and Adaptation: The Case of Irrigated Agriculture in the Murray–Darling Basin in Australia," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(4), pages 531-554, December.
    5. Fraser, Iain & Graham, Mary, 2005. "Efficiency Measurement of Australian Dairy Farms: National and Regional Performance," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 13.
    6. Chambers, Christopher P. & Miller, Alan D., "undated". "Inefficiency," Working Papers WP2011/14, University of Haifa, Department of Economics, revised 30 Nov 2011.
    7. Robert G. Chambers & Erik Lichtenberg, 1996. "A Nonparametric Approach to the von Liebig-Paris Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 373-386.
    8. Henderson, Benjamin B. & Kingwell, Ross S., 2005. "Rainfall and Farm Efficiency Measurement for Broadacre Agriculture in South-Western Australia," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 13.
    9. repec:bla:canjag:v:58:y:2010:i:s1:p:531-554 is not listed on IDEAS
    10. Chambers,Robert G. & Quiggin,John, 2000. "Uncertainty, Production, Choice, and Agency," Cambridge Books, Cambridge University Press, number 9780521622448, September.
    11. Yun Zhang & Robert Bartels, 1998. "The Effect of Sample Size on the Mean Efficiency in DEA with an Application to Electricity Distribution in Australia, Sweden and New Zealand," Journal of Productivity Analysis, Springer, vol. 9(3), pages 187-204, March.
    12. Rajiv D. Banker, 1993. "Maximum Likelihood, Consistency and Data Envelopment Analysis: A Statistical Foundation," Management Science, INFORMS, vol. 39(10), pages 1265-1273, October.
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    1. Theodoros Skevas & Teresa Serra, 2016. "The role of pest pressure in technical and environmental inefficiency analysis of Dutch arable farms: an event-specific data envelopment approach," Journal of Productivity Analysis, Springer, vol. 46(2), pages 139-153, December.
    2. Boussemart, Jean-Philippe & Crainich, David & Leleu, Hervé, 2015. "A decomposition of profit loss under output price uncertainty," European Journal of Operational Research, Elsevier, vol. 243(3), pages 1016-1027.
    3. Kapelko, Magdalena & Oude Lansink, Alfons & Stefanou, Spiro E., 2014. "Assessing dynamic inefficiency of the Spanish construction sector pre- and post-financial crisis," European Journal of Operational Research, Elsevier, vol. 237(1), pages 349-357.
    4. Taylan G. Topcu & Konstantinos Triantis, 2022. "An ex-ante DEA method for representing contextual uncertainties and stakeholder risk preferences," Annals of Operations Research, Springer, vol. 309(1), pages 395-423, February.
    5. Amer Ait Sidhoum, 2023. "Assessing the contribution of farmers’ working conditions to productive efficiency in the presence of uncertainty, a nonparametric approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(8), pages 8601-8622, August.
    6. Serra, Teresa & Oude Lansink, Alfons, 2014. "Measuring the impacts of production risk on technical efficiency: A state-contingent conditional order-m approach," European Journal of Operational Research, Elsevier, vol. 239(1), pages 237-242.
    7. Theodoros Skevas & Teresa Serra, 2017. "Derivation of netput shadow prices under different levels of pest pressure," Journal of Productivity Analysis, Springer, vol. 48(1), pages 25-34, August.
    8. Skevas, Theodoros & Lansink, Alfons Oude & Stefanou, Spiro E., 2012. "Measuring technical efficiency in the presence of pesticide spillovers and production uncertainty: The case of Dutch arable farms," European Journal of Operational Research, Elsevier, vol. 223(2), pages 550-559.
    9. Skevas, Theodoros & Stefanou, Spiro E. & Oude Lansink, Alfons, 2014. "Pesticide use, environmental spillovers and efficiency: A DEA risk-adjusted efficiency approach applied to Dutch arable farming," European Journal of Operational Research, Elsevier, vol. 237(2), pages 658-664.
    10. Peggy Schrobback & Sean Pascoe & Louisa Coglan, 2014. "Shape Up or Ship Out: Can We Enhance Productivity in Coastal Aquaculture to Compete with Other Uses?," PLOS ONE, Public Library of Science, vol. 9(12), pages 1-25, December.
    11. Kevin Schneider & Ioannis Skevas & Alfons Oude Lansink, 2021. "Spatial Spillovers on Input‐specific Inefficiency of Dutch Arable Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(1), pages 224-243, February.

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