A non-parametric Free Disposal Hull (FDH) approach to technical efficiency: an illustration of radial and graph efficiency measures and some sensitivity results

Abstract

The purpose of this paper is to investigate the sensitivity of a recently proposed non-parametric approach to technical efficiency measurement. Using a data set of Belgian municipalities, we analyze the sensitivity of the Free Disposal Hull (FDH) approach with respect to the number of input and output dimensions and with respect to sample size, and we consider the impact of outliers on efficiency scores. We finally investigate the effects of using a variety of alternative (radial) efficiency measures.