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Economic elasticities of input substitution using data envelopment analysis.

ABSTRACT: The use of elasticities of substitution between inputs is a standard method for addressing the effect of a change in the mix of inputs used for production from a technical or cost standpoint. Most estimation methods use parametric production or cost functions or frontiers to estimate these elasticities. A potentially useful nonparametric alternative is data envelopment analysis (DEA). The purpose of this paper is to derive elasticities of input substitution for both technical and cost frontiers using DEA, extending the use of this approach in the field of economics and associated fields. The paper provides derivations for both Hicksian (production and cost frontier) and Morishima (cost frontier) elasticities of input substitution, as well as a parsimonious method for estimating them using DEA. The derivations are presented using an agricultural example form Kansas, USA.

SUBMITTER: Miller NJ

PROVIDER: S-EPMC6687138 | biostudies-literature | 2019

REPOSITORIES: biostudies-literature

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Economic elasticities of input substitution using data envelopment analysis.

Miller Noah J NJ Bergtold Jason S JS Featherstone Allen M AM

PloS one 20190808 8

The use of elasticities of substitution between inputs is a standard method for addressing the effect of a change in the mix of inputs used for production from a technical or cost standpoint. Most estimation methods use parametric production or cost functions or frontiers to estimate these elasticities. A potentially useful nonparametric alternative is data envelopment analysis (DEA). The purpose of this paper is to derive elasticities of input substitution for both technical and cost frontiers ...[more]

PMID: 31393895

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Project description:BackgroundStudies using Data Envelopment Analysis to benchmark Intensive Care Units (ICUs) are scarce. Previous studies have focused on comparing efficiency using only performance metrics, without accounting for resources. Hence, we aimed to perform a benchmarking analysis of ICUs using data envelopment analysis.MethodsWe performed a retrospective analysis on observational data of patients admitted to ICUs in Brazil (ORCHESTRA Study). The outputs in our data envelopment analysis model were the performance metrics: Standardized Mortality Ratio (SMR) and Standardized Resource Use (SRU); whereas the inputs consisted of three groups of variables that represented staffing patterns, structure, and strain, thus resulting in three models. We compared efficient and non-efficient units for each model. In addition, we compared our results to the efficiency matrix method and presented targets to each non-efficient unit.ResultsWe performed benchmarking in 93 ICUs and 129,680 patients. The median age was 64 years old, and mortality was 12%. Median SMR was 1.00 [interquartile range (IQR): 0.79-1.21] and SRU was 1.15 [IQR: 0.95-1.56]. Efficient units presented lower median physicians per bed ratio (1.44 [IQR: 1.18-1.88] vs. 1.7 [IQR: 1.36-2.00]) and nursing workload (168 hours [IQR: 168-291] vs 396 hours [IQR: 336-672]) but higher nurses per bed ratio (2.02 [1.16-2.48] vs. 1.71 [1.43-2.36]) compared to non-efficient units. Units from for-profit hospitals and specialized ICUs presented the best efficiency scores. Our results were mostly in line with the efficiency matrix method: the efficiency units in our models were mostly in the "most efficient" quadrant.ConclusionData envelopment analysis provides managers the information needed to identify not only the outcomes to be achieved but what are the levels of resources needed to provide efficient care. Different perspectives can be achieved depending on the chosen variables. Its use jointly with the efficiency matrix can provide deeper understanding of ICU performance and efficiency.

Project description:BackgroundIn order to measure and analyse the technical efficiency of district hospitals in Ghana, the specific objectives of this study were to (a) estimate the relative technical and scale efficiency of government, mission, private and quasi-government district hospitals in Ghana in 2005; (b) estimate the magnitudes of output increases and/or input reductions that would have been required to make relatively inefficient hospitals more efficient; and (c) use Tobit regression analysis to estimate the impact of ownership on hospital efficiency.MethodsIn the first stage, we used data envelopment analysis (DEA) to estimate the efficiency of 128 hospitals comprising of 73 government hospitals, 42 mission hospitals, 7 quasi-government hospitals and 6 private hospitals. In the second stage, the estimated DEA efficiency scores are regressed against hospital ownership variable using a Tobit model. This was a retrospective study.ResultsIn our DEA analysis, using the variable returns to scale model, out of 128 district hospitals, 31 (24.0%) were 100% efficient, 25 (19.5%) were very close to being efficient with efficiency scores ranging from 70% to 99.9% and 71 (56.2%) had efficiency scores below 50%. The lowest-performing hospitals had efficiency scores ranging from 21% to 30%.Quasi-government hospitals had the highest mean efficiency score (83.9%) followed by public hospitals (70.4%), mission hospitals (68.6%) and private hospitals (55.8%). However, public hospitals also got the lowest mean technical efficiency scores (27.4%), implying they have some of the most inefficient hospitals.Regarding regional performance, Northern region hospitals had the highest mean efficiency score (83.0%) and Volta Region hospitals had the lowest mean score (43.0%).From our Tobit regression, we found out that while quasi-government ownership is positively associated with hospital technical efficiency, private ownership negatively affects hospital efficiency.ConclusionsIt would be prudent for policy-makers to examine the least efficient hospitals to correct widespread inefficiency. This would include reconsidering the number of hospitals and their distribution, improving efficiency and reducing duplication by closing or scaling down hospitals with efficiency scores below a certain threshold. For private hospitals with inefficiency related to large size, there is a need to break down such hospitals into manageable sizes.

Dataset Information

Economic elasticities of input substitution using data envelopment analysis.

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Economic elasticities of input substitution using data envelopment analysis.

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