On the inconsistency of the MalmquistLuenberger index
We show that the MalmquistLuenberger (ML) index may yield inconsistent results. The ML index can signal declining productivity when productivity is increasing. We discuss this issue within the standard decomposition of the ML index. We use a simple example and give cautionary advice to practitioners. We propose a solution for solving the inconsistency through a new postulate.
data envelopment analysis malmquistluenberger productivity index technological change efficiency change directional distance function