Oriented Stochastic Data Envelopment Models: Ranking Comparison to Stochastic Frontier Approach
CERGE-EI Working Paper No. 271
51 Pages Posted: 16 Dec 2005
Date Written: August 2005
Results of data envelopment analysis sensitively respond to stochastic noise in the data. In this paper, by introduction of output augmentation and input reduction I extend additive models for stochastic data envelopment analysis (SDEA), which were developed by Li (1998) to handle the noise in the data. Applying the linearization procedure by Li (1998) the linearized versions of models are derived. In the empirical part of this work, the efficiency scores of Indonesian rice farms are computed. The computed scores are compared to the stochastic frontier approach scores by Druska and Horrace (2004) and weak ranking consistency with results of stochastic frontier method is observed.
Keywords: Stochastic data envelopment analysis, linear programming, efficiency, rice farm
JEL Classification: C14, C61, L23, Q12
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