Data envelopment analysis (DEA) is a popular non-parametric technique for determining the efficiency of a homogeneous set of decision-making units (DMUs). In many practical cases, there is some doubt if the all the DMUs form a single group with a common efficiency distribution. The Mann-Whitney rank statistic has been used in DEA both to test if two groups of DMUs come from a common efficiency distribution and also to test if the two groups have a common frontier, each of which are likely to have important but different policy implications for the management of the groups. In this paper it is demonstrated that where the Mann-Whitney rank statistic is used for the second of these it is likely to overestimate programmatic inefficiency, particularly of the smaller group. A new non-parametric statistic is proposed for the case of comparing the efficient frontiers of two groups, which overcomes the problems we identify in the use of the Mann-Whitney rank statistic for this purpose. © 2005 Operational Research Society Ltd. All rights reserved.
Bibliographical noteThis is a post-peer-review, pre-copyedit version of an article published in Journal of the Operational Research Society. The definitive publisher-authenticated version Simpson, Gary P.M. (2005). Programmatic efficiency comparisons between unequally sized groups of DMUs in DEA. Journal of the Operational Research Society, 56 (12), pp. 1431-1438, is available online at: http://www.palgrave-journals.com/jors/journal/v56/n12/full/2601961a.html
- data envelopment analysis