Sensitivity and dimensionality tests of DEA efficiency scores

Abstract Extending Hughes and Yaisawarng [J.L.T. Blank (Ed.), Public Provision and Performance: Contributions from Efficiency and Productivity Measurement, Elsevier Science B.V., The Netherlands, p. 277], this paper addresses issues of dimensionality for enhancing the credibility of data envelopment analysis (DEA) results in practical applications and assisting practitioners in making an appropriate selection of variables for a DEA model. The paper develops a structured approach to testing whether changing the number of model variables for a fixed sample size affects DEA results. Using a simulation method, the paper tests whether a calculated DEA efficiency score reflects the dimension of the model or the existence of inefficiency. An empirical illustration is included.

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