Scandinavian Working Papers in Economics

HERO Online Working Paper Series,
University of Oslo, Health Economics Research Programme

No 2003:7: Far out or alone in the crowd: Classification of selfevaluators in DEA

Dag Fjeld Edvardsen , Finn R. Føsund () and Sverre A.C. Kittelsen
Additional contact information
Dag Fjeld Edvardsen: The Norwegian Building Research Institute, Norway
Finn R. Føsund: Department of Economics, Postal: University of Oslo, P O Box 1095 Blindern, N-0317 Oslo, Norway
Sverre A.C. Kittelsen: The Frisch Centre, Norway

Abstract: The units found strongly efficient in DEA studies on efficiency can be divided into self-evaluators and active peers, depending on whether the peers are referencing any inefficient units or not. The contribution of the paper starts with subdividing the selfevaluators into interior and exterior ones. The exterior self-evaluators are efficient “by default”; there is no firm evidence from observations for the classification. These units should therefore not been regarded as efficient, and be removed from the observations on efficiency scores when performing a two-stage analysis of explaining the distribution of the scores. A method for classifying self-evaluators based on the additive DEA model is developed. The application to municipal nursing- and home care services of Norway shows significant effects of removing exterior self-evaluators from the data when doing a two-stage analysis.

Keywords: Self-evaluator; interior and exterior self-evaluator; DEA; efficiency; referencing zone; nursing homes

JEL-codes: C44; C61; D24; I19; L32

24 pages, June 21, 2009

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