When does data envelopment analysis outperform a nave efficiency measurement model?
This paper compares the results from data envelopment analysis (DEA) to a nave efficiency measurement model, which generates a scalar efficiency score by averaging all outputinput ratios. Random data and real-life data are used to test the relative performance of the nave model against various DEA models. The results suggest that the proposed the nave model replicates DEA efficiency scores almost perfectly for constant return-to-scales and low heterogeneity in outputinput data. It is therefore concluded that heterogeneity in outputinput data is important to take advantage of the capability of DEA. It is also shown that heterogeneity is more relevant to efficiency measurement than the number of dimensions.
data envelopment analysis efficiency analysis robustness and sensitivity analysis