DEA and Machine Learning for Performance Prediction

Abstract

Data envelopment analysis (DEA) has been widely applied to evaluate the performance of banks, enterprises, governments, research institutions, hospitals, and other fields as a non-parametric estimation method for evaluating the relative effectiveness of research objects. However, the composition of its effective frontier surface is based on the input-output data of existing decision units, which makes it challenging to apply the method to predict the future performance level of other decision units. In this paper, the Slack Based Measure (SBM) model in DEA method is used to measure the relative efficiency values of decision units, and then, eleven machine learning models are used to train the absolute efficient frontier to be applied to the performance prediction of new decisions units. To further improve the prediction effect of the models, this paper proposes a training set under the DEA classification method, starting from the training-set sample selection and input feature indicators. In this paper, regression prediction of test set performance based on the training set under different classification combinations is performed, and the prediction effects of proportional relative indicators and absolute number indicators as machine-learning input features are explored. The robustness of the effective frontier surface under the integrated model is verified. An integrated models of DEA and machine learning with better prediction effects is proposed, taking China’s regional carbon-dioxide emission (carbon emission) performance prediction as an example. The novelty of this work is mainly as follows: firstly, the integrated model can achieve performance prediction by constructing an effective frontier surface, and the empirical results show that this is a feasible methodological technique. Secondly, two schemes to improve the prediction effectiveness of integrated models are discussed in terms of training set partitioning and feature selection, and the effectiveness of the schemes is demonstrated by using carbon-emission performance prediction as an example. This study has some application value and is a complement to the existing literature.