Stochastic Frontier Analysis Research Articles

Exploring the Path of Balanced Development: The Decoupling Evaluation of Agricultural Production Efficiency and Land Carrying Capacity

ABSTRACTHigh‐quality development in agriculture is crucial for maintaining the harmonious balance between human society and the natural environment, and promoting this development model is one of the key measures to alleviate land degradation issues. This study, grounded in the PRED theory (Population, Resources, Environment, and Development theory) framework, establishes an evaluation system for high‐quality agricultural development by selecting 128 cities within the Yangtze River Economic Belt as its samples. It quantifies land carrying capacity, utilizes the Stochastic Frontier Analysis (SFA) model to assess agricultural production efficiency, and applies the Tapio decoupling model to analyze the interplay between these two factors. The results reveal that the land resource carrying index has risen from 1.245 to 1.70, indicating an escalating tension between population and food resources. Furthermore, agricultural production efficiency has seen a 16.56% increase, reflecting positive advancements in agricultural production across the region. Spatial distribution analysis shows that the standard deviation ellipse is concentrated in the mid and lower reaches, centered in Changde, Hunan, and expanding westward, with a broader coverage area and perimeter. Additionally, the decoupling relationship between land carrying capacity and agricultural production efficiency primarily manifests in three forms: strong negative decoupling, weak decoupling, and expansive negative decoupling. This research offers significant insights for effectively mitigating the strain between population growth and resource‐environmental carrying capacity.

A spatial stochastic frontier model with fixed effects and endogenous environmental variables

ABSTRACT Stochastic frontier analysis (SFA) models often address fixed effects and endogeneity as separate issues. This study bridges this gap by proposing a unified approach within an ML (maximum likelihood) framework to manage both challenges simultaneously. The ML function is derived in a closed form, but its maximisation requires a numerical solution. To assess the properties of the ML estimator, a Monte Carlo simulation was performed. The simulation shows that the estimator performs reasonably well and gains efficiency asymptotically. The applicability of the estimator was further assessed through an empirical exercise that examined technical efficiency of the production function in a panel of European countries, managing spatiality, endogeneity, and fixed effects.

Technical efficiency, combination of innovation strategies and group membership

PurposeThis research aims to study the impact that the interaction between internal R&D and R&D cooperation has on the technical efficiency of firms, as well as to analyse whether firms belonging to a group achieve any additional level of technical efficiency.Design/methodology/approachWe employ the stochastic frontier version of a knowledge production function, particularly the inefficiency model, and we combine the stochastic frontier analysis (SFA) and the complementarity approach.FindingsThe interaction between internal R&D and R&D cooperation has a positive and significant impact on technical efficiency when the complementarity test is applied between companies belonging to a group, and there is no interaction when they do not belong to a group.Practical implicationsKnowing this type of information in advance is critical for managers and policymakers, as it allows them to avoid undesirable combinations of innovation strategies or contexts not favourable for their implementation, as well as the formulation of policies leading to an efficient allocation of public resources.Originality/valueTo the best of the authors’ knowledge, this paper contributes an original approach in evaluating the complementarity of internal R&D and R&D cooperation from the perspective of technical efficiency and group membership, combining the SFA and the complementarity approach.

How efficient are schools in South-East Asia? An analysis through OECD PISA 2018 data

ABSTRACT This study assesses school efficiency in six South-East Asian countries using OECD PISA 2018 data. The average PISA scores were 425.4 in mathematics, 429.5 in science, and 406.2 in reading, with Singapore scoring the highest and the Philippines lowest. Using stochastic frontier analysis, the study model's efficiency across these domains, finding average efficiency scores of 38.47% in math, 48.83% in science, and 49.82% in reading. The study also examines how ICT affects scores and efficiency, suggesting that internet-connected computers can improve PISA scores, while general computer availability may boost efficiency. This analysis offers a benchmark for schools in the region, providing insights into factors that influence both PISA performance and efficiency.

Measuring influencing factors affecting mortality rates during the COVID-19 pandemic

ABSTRACT Background The COVID-19 pandemic has revealed clear deficiencies in global public health policies and healthcare systems when confronted with the emergence of a novel and deadly infectious disease. Objectives With 4 years elapsed since the onset of the pandemic, ample data now exist to analyse the associations between the implementation of diverse public health policies, sociodemographic factors and COVID-19 mortality rates. Methods This study utilised the dataset compiled by ‘Our World in Data’ spanning the period of the COVID-19 pandemic from 2020 to 2022. Stochastic frontier analysis was employed to assess the influencing factors and their relationship with mortality rates resulting from COVID-19 infections across 156 countries or regions. Results This study yielded several key findings: (1) There remains a 33% margin for improvement in the global mortality rate concerning the COVID-19 pandemic; (2) During the initial stage of the pandemic, when an effective vaccine was not yet available, implementing public health control policies could reduce both the infection and mortality rates; (3) Areas characterised by higher population densities, a greater proportion of individuals aged 65 and over, and elevated prevalence rates of diabetes demonstrated higher mortality rates; and (4) Increasing vaccination coverage emerged as an effective strategy for reducing mortality rates. Conclusions As our understanding of the COVID-19 virus improves, global economies and social interactions have gradually returned to normality. It is anticipated that the findings of this study can serve as a valuable reference in combating potential future pandemics caused by unknown viruses.

Stochastic Frontier Analysis of Technical Efficiency of Smallholder Maize Farmers in Morogoro Municipality: A Reflection from RIPAT Program

This study looks into the elements that influence maize production and technical efficiency among households participating in the RIPAT SUA Project in Morogoro Municipality, using stochastic frontier analysis for the 2022 – 2023 season. The focus was on socio-economic characteristics, land size, seed usage, use of fertilizer extension services, training from the project, and education. The primary objective was to examine the factors influencing maize production and efficiency by evaluating socioeconomic aspects and specific agricultural techniques. A total of 110 households were surveyed with standardized questionnaires. Socioeconomic data was collected, key variables were evaluated and key variables were analyzed using descriptive statistics and stochastic frontier analysis. The results reveal that land size harms productivity (β = -0.436, p < 0.001), whereas improved seed usage has a positive impact (β = 0.401, p = 0.016). Education level (β = -1.168, p = 0.002) and agriculture experience (β = -0.016, p = 0.049) considerably reduce technical inefficiency, insisting on the importance of education interventions. Additionally, 40% of households have access to VSLA, revealing financial problems. While 94.55% of households got training, only 18.18% received extension services which could hamper the best productivity. Every household reported owning land and using seeds highlighting that they had the necessary materials for maize production. Regarding technical efficiency, Magadu ward high score of 5%, while Kauzeni has the lowest at 1.9% suggesting significant disproportions in productivity among wards. These findings emphasize the importance of focused initiatives to improve agriculture productivity through enhancing farmer education and training, experience, and increased access to finance. These strategies are critical for improving maize productivity and addressing food security issues among households participating in programs like the RIPAT SUA initiative hence will increase agricultural efficiency and contribute to more farmer-sustainable farming methods throughout the region

Examining malaria treatment and prevention spending efficiency in malaria-endemic countries, 2000–2020

BackgroundIn 2021, an estimated 750,000 people died from malaria. Despite this significant burden, globally, malaria incidence and mortality rates have substantially dropped over the last 30 years. However, growth in spending on malaria and improved outcomes have recently stagnated. This development has made it more important than ever to understand what constitutes efficient spending on malaria.MethodsData from various sources, including disaggregated data on malaria spending from the WHO Global Malaria Programme, National Health Accounts, and the Global Burden of Disease 2021 study was used in this study. The National Health Account report is produced at the end of a national accounting exercise that aims to map the flow of financial resources from all perspectives—incl. sources, agencies—in the health sector. Malaria spending estimates for all malaria-endemic countries from 2000 to 2020, with government and donor spending disaggregated into 11 key programme areas were generated in this study. Then, these spending estimates were combined with outcome data and estimated country efficiency using robust non-parametric stochastic frontier analysis and linear regression to examine the types of malaria spending associated with better malaria outcomes.ResultsAcross malaria-endemic countries, there is wide variation in malaria spending, with spending associated with the malaria burden within the country. Argentina, Paraguay, and Turkmenistan stood out as examples of low spending relative to their respective malaria incident per person at risk rates, while the Philippines, Guatemala, and Sri Lanka stood out as countries with case fatality ratios that were low relative to their malaria spending. Having a greater proportion of malaria spending sourced from donors or on prevention was associated with increases in incidence efficiency, while having a greater proportion of spending on anti-malarial medicines was associated with increases in case fatality efficiency.ConclusionsPrioritization of spending on prevention, anti-malarial medicines, and health systems strengthening can fight incident cases and fatalities simultaneously, especially in resource-scarce, malaria-endemic countries. Furthermore, improving the availability, frequency of collection, and quality of detailed disaggregated spending data is essential to support work that strengthens the evidence base on spending efficiency and work that improves understanding of how spending on malaria could be leveraged to bridge gaps in equity across population groups.

The pharmaceutical distributors' efficiency in Italy: an assessment of the impact of the 2010 reimbursable drug pricing reform.

To assess the impact on pharmaceutical wholesalers' financial viability and efficiency of the reform of the wholesalers' and pharmacies' margins on reimbursable drugs enacted in 2010 that halved the distributors' margins. We perform a stochastic frontier analysis on a large original dataset comprising financial and production data from 2009, a year prior to the reform, to 2019 gathered in order to assess the impact of the reform on firms' profitability and efficiency. The implemented policies have not been successful in fostering the development of a more efficient market that would ultimately benefit social welfare. Overall, our findings indicate that bigger firms lag behind their smaller counterparts in terms of efficiency, even in the long run. Our findings also suggest that an efficient pharmaceutical wholesaler is currently unable to generate normal profit from the distribution of reimbursable drugs. Compared to the other European countries, that seem to have a cost oriented approach, Italy provides one of the lowest margins to pharmaceutical wholesalers without properly considering the costs of the drugs' distribution. A new regulatory approach to wholesaling margins is needed in order to improve efficiency and welfare.

Regional efficiency analysis of fresh food cold chain logistics in China based on three-stage DEA model

PurposeAssessing the efficiency of fresh food cold chain logistics as accurately as possible is essential for industry development planning. This study was designed to analyze the efficiency of fresh food cold chain logistics in China.Design/methodology/approachA three-stage data envelopment analysis (DEA) model was used to analyze the efficiency of fresh food cold chain logistics in 30 provinces of China from 2013 to 2019. The stochastic frontier analysis (SFA) model in the second stage was used to eliminate the influence of external environmental factors and random disturbances on efficiency analysis results.Findings(1) The overall actual efficiency of fresh food cold chain logistics in China is unsatisfactory, with an average technical efficiency of 0.382 over the 7-year period. (2) The national average technical efficiency and average scale efficiency were overestimated by 29.9% and 40.0%, respectively, compared with the actual values. (3) The efficiency of fresh food cold chain logistics does not align with the level of regional economic development. (4) Distinct regional variations exist in the efficiency of fresh food cold chain logistics in China, with higher efficiencies observed in Northwest China and the Central Yangtze River regions, and the lowest efficiencies in the northeast regions.Originality/valueThis study applies a three-stage DEA model to assess the development and regional differences of fresh food cold chain logistics in China, enriching the application of models and empirical analysis in this field. By analyzing the situation in China, it provides ideas and references for other developing countries to develop cold chain logistics.

Climate Change Mitigation in the Dairy Sector: Uncovering Heterogeneity Through Eco‐Efficiency Clubs

ABSTRACTCombining climate change goals with economic targets is crucial for the dairy sector, which is a significant contributor to agricultural greenhouse gas (GHG) emissions worldwide. In this paper, we assess economic and climate change implications of dairy production with panel data of Irish dairy farms from 2013 to 2021. We calculate transient, persistent, and overall eco‐efficiency with respect to GHG emissions by way of stochastic frontier analysis. The innovative component of our analysis is the application of club convergence analysis to explore heterogeneity in transient eco‐efficiency development over time. This offers a nuanced understanding of farm‐level responses to climate challenges. We then explore correlations between convergence clubs and GHG mitigation technology usage. Despite high overall eco‐efficiency, our results uncover significant variability across farms, with some showing improvement and others decline in eco‐efficiency over time. We also find that changes in milk yield and specialization are positively related to better eco‐efficiency development, while GHG mitigation technologies do not play an important role. These insights suggest that the average high eco‐efficiency masks considerable underlying heterogeneity, presenting opportunities for tailored policy interventions. Our study contributes to the literature by highlighting the complex dynamics of eco‐efficiency in the dairy sector and underscoring the need for policy frameworks that account for farm‐level diversity.

Two-tier stochastic frontier analysis: heterogeneous error distributions and model selection

Two-tier stochastic frontier analysis: heterogeneous error distributions and model selection

Use Efficiency, Reduction Potential, and Effects of Fertilizers on Carbon Emissions in China’s Major Citrus Regions

Enhancing the efficiency of fertilizer utilization and advancing fertilizer reduction efforts constitutes a pivotal initiative for augmenting the quality and productivity of the citrus industry; this constitutes an indispensable prerequisite for attaining green and sustainable development. Utilizing panel data from seven prominent mandarin-producing regions and seven prominent tangerine-producing regions in China spanning from 2002 to 2022, this study employed the stochastic frontier analysis (SFA) method to develop a translog production function model for precisely measuring the fertilizer use efficiency for mandarins and tangerines. Employing the calculated optimal fertilizer use rates, we further ascertained the fertilizer reduction potential for mandarin and tangerine; then, we estimated the associated carbon emission reduction potential within these key citrus regions. The research revealed the following findings: the overall level of citrus fertilizer use efficiency in China is comparatively low, with the mean values for mandarin and tangerine fertilizer use efficiency being merely 0.4403 and 0.3887, respectively, indicating substantial room for improvement by approximately 60%; substantial potential exists for decreasing fertilizer use in China’s citrus industry, with average reduction potentials of 66.27% for mandarins and 64.83% for tangerines, signifying a notable redundancy in fertilizer application within major citrus-producing areas. The magnitude of carbon emission reduction potential through the diminution of citrus fertilizer use is tremendous. When optimal fertilizer rates are applied, the average carbon emission reductions resulting from fertilizer reduction in mandarins and tangerines amount to 815.8681 kg/hm2 and 602.3551 kg/hm2, respectively. The average carbon reduction potential for mandarins and tangerines reach levels of 55.9673% and 61.1299%, respectively, both surpassing the threshold of 55%. Significant differences exist in the technical efficiency of fertilizer input, reduction potential, and carbon emission mitigation potential among major citrus-producing regions. Citrus orchards in Guangdong exhibit higher potential for fertilizer reduction but demonstrate a relatively low level of technical efficiency. In contrast, Hunan Province shows an opposite trend, necessitating the development of region-specific strategies. Therefore, to minimize citrus fertilizer use and augment the technical efficiency of citrus fertilizer, it is imperative to comprehensively integrate and promote the “three new” technologies aimed at reducing fertilizer use and enhancing its efficiency within the citrus industry; implement a regional coordinated development strategy for citrus fertilizer reduction; and intensify policy guidance, publicity, and training efforts related to citrus fertilizer reduction, efficiency enhancement, and carbon emissions reduction.

Assessing energy efficiency and its dynamic changes in the water sector integrating heterogeneity and carbon emissions

Enhancing the energy performance of water utilities is a critical step towards achieving a net-zero carbon industry. Traditional energy performance assessments in the water industry often overlook heterogeneity among water companies and fail to account for changes in energy efficiency (EE) over time. To address these shortcomings, this research employs Stochastic Frontier Analysis (SFA) techniques to assess energy performance of two types of water companies such as Water and Sewerage Companies (WaSCs) and Water-only Companies (WoCs) within a single energy frontier model. Empirical analysis of water companies in England and Wales reveals an average EE score of 0.940 over the 2010–2020 period, suggesting a 6% energy-saving potential. English and Welsh water industry exhibited an overall 0.3% annual improvement in energy productivity change (EPC). This improvement was primarily attributed to efficiency changes (average 1.005), which offset the negative shift in technology change (average 0.998), while the scale effect remained negligible (average 1.000). WaSCs experienced a slight increase in EPC, with an average value of 1.018, indicating an improvement in energy productivity. In contrast, WoCs exhibited a decrease in EPC, with an average value of 0.989, suggesting a decline in energy productivity. These disparities were due to opposite shifts in the efficient production frontier; WaSCs had a positive shift (average 1.012), while WoCs had a negative shift (average 0.984). The study also highlights the impact of regulatory policies on energy performance. The 2009 price review involved modest improvements (average EPC = 1.013), while the 2014 price review yielded unfavorable results (average EPC = 0.993), emphasizing the need for long-term policies to facilitate sector-wide transformation towards carbon neutrality.

DEA와 SFA 모형을 이용한 한국 프로야구의 비용효율성 분석

The purpose of this study is to analyze the cost efficiency of Korean professional baseball(KBO) teams through Data Envelopment Analysis(DEA) and Stochastic Frontier Analysis(SFA) and to examine its determinants.. In this study, we used 20 years of data from 2003 to 2022 for eight teams to examine the cost efficiency and its influencing factors of each team through DEA window analysis and SFA reflecting the time series. The empirical results showed that the cost efficiency of KBO teams is not high, but it is generally improving. Among them, the size of the stadium and the number of wins have a positive effect on cost efficiency, while the number of new stadiums and free agents has a negative effect on cost efficiency. In particular, the difference between the efficiency values derived from the two methods is quite large, which means that it is highly sensitive to external shocks due to the probable error. The fact that many teams react greatly to external shocks suggests that the support of parent companies and local governments greatly affects the sustainability of the teams due to the lack of self-reliance of the teams. In order to increase the self-reliance of KBO teams facing a new competitive environment after COVID-19, continuous efforts are needed to transform into solid companies, including positive external support and cooperation with local governments, as well as creating higher-quality cultural content and discovering diverse sources of revenue.

Explaining wine scores through stochastic frontier analysis. An intent to measure sensory non-observable attributes

ABSTRACT Experts give scores to wines, which are quality proxies for marketers and buyers. The production of scores proxying wine quality is explained by a set of observable objective attributes, plus another set of unobservable and subjective (sensory) features, and randomness. Is it possible to use a Stochastic Frontier Approach (SFA) to understand whether objective and subjective (sensory) characteristics of wines explain the differences in ‘producing’ wine scores? We estimate a wine quality stochastic frontier production function, using a database of 1800 top-scored wines, in 18 years-window encompassing objective determinants that largely explain the scores (price, production, year, grape, country, etcetera), being aware that sensory aspects related to wine grading are unobservable. We find that the observable variables explain part of the ‘efficiency’ in attaining scores and suggest that ‘inefficiency’ in score generation can be attributed to unobservable (sensory) variables.

Energy Price Distortions and Urban Carbon Emission Efficiency: Evidence from China’s Energy-Intensive Sectors

With a primary focus of achieving carbon neutrality, the energy-intensive industrial sectors (EIIs) contribute to more than half of China’s carbon dioxide (CO2) emissions. During the process of China’s rapid economic development, distorted energy prices gradually became the main obstacle to energy conservation and emission reductions in the EIIs. Therefore, this study focused on determining the mechanisms affecting the energy price distortions of carbon emission efficiency (CEE) in China’s EIIs. Based on a stochastic frontier analysis, the changing trend of CEE in China’s EIIs was evaluated. The channels impacting the energy price distortions of CEE were further analyzed by a mediating effect and moderated mediating effect model. The main contributions and findings include the following: energy price distortions have a significant negative impact on CEE by suppressing technological innovations and hindering the restructuring of energy consumption; governmental environmental regulatory policies mitigate their suppressing effect on technological innovations and reduce the preventing effect by improving the energy consumption structure. The results suggest that market-based price reforms and moderate environmental regulation by the government could help to improve CEE in China’s EIIs. These findings are of great significance for promoting the sustainable development of the energy-intensive industrial sectors and achieving carbon neutrality.

Measuring the time-invariant and time-varying technical efficiency of ports in Tunisia: a stochastic frontier analysis

Measuring the time-invariant and time-varying technical efficiency of ports in Tunisia: a stochastic frontier analysis

MSME Lending And Bank Efficiency: Comparison Between Indonesia And Malaysia

MSMEs are one of the pillars of the country's economy; banking has a role in facilitating financing for MSMEs so that they can proliferate. On the other hand, banks must consider the cost efficiency they produce, considering that MSMEs are one of the sectors with high credit risk. This study aims to prove that financing for MSMEs can increase bank efficiency and that there are differences between banking in Indonesia and Malaysia. This study uses quantitative with an associative and comparative approach. The population of this study is banks listed on the Indonesia Stock Exchange and Bursa Malaysia in the 2020-2023 period. The Indonesian sample technique uses the purposive sampling method, and Malaysia uses the saturated sample method. The analysis technique uses stochastic frontier analysis (SFA), multiple linear regression, and difference tests with the help of statistical tools like Stata 17. The findings of the study show that financing for MSMEs affects bank efficiency. There is no difference between bank efficiency in Malaysia and Indonesia, but there is a significant difference between MSME financing in Malaysia and Indonesia. The theoretical implications of this study complement the theory regarding the relationship between MSME financing and bank efficiency. The practical implications of this research can provide recommendations to regulators in Indonesia to boost banking by increasing the financing ratio to MSMEs.

Efficiency and somatic cell count: Unraveling Holstein cow productivity through stochastic frontier modeling

The yield and quality decrease due to high somatic cell counts caused by mastitis, and this also negatively affects the profitability, efficiency, and sustainability of dairy farms. The main objective of this study was to investigate the effects of somatic cell counts on yield, milk chemicals, and the technical efficiency of Holstein dairy cows. A total of 165 lactating cows were involved in the research, and all cows were fed the diets as a total mixed ration three times a day. Milk samples were collected each day during milking and analyzed for chemical composition and somatic cell counts (SCC). The daily milk production of each cow was obtained from the SCR herd management program, which is integrated with the parlor. In conclusion, it was determined that for each group, the efficiency scores, SCC, and milk yield of cows varied between 0.80 and 0.99, 322.000 and 557.857 cells/mL, and 33.13 and 48.90 Kg/d, respectively; they also differed significantly in each group. Considering the findings, milk production can be increased by 7% without changing any input. Additionally, every 1% decrease in SCC will increase the efficiency of milk production by 0.55%. Cows with low technical efficiency (TE) scores produced 2.87 kg/d/cow less milk compared to animals with high TE. Reducing the SCC of the group with a low TE (456.878 cells/mL) to a SCC of high TE (438.869 cells/mL) will increase milk yield by 2.87 kg/d/cow on average. In conclusion, minimizing losses due to mastitis is paramount for enhancing dairy farm efficiency. This research underscores the interplay between TE and udder health, providing a comprehensive understanding of individual cow performance. Addressing inefficiencies and promoting udder health can significantly contribute to sustainable and economically viable dairy farming practices. Keywords: Dairy farm; Mastitis; Somatic cell count; Stochastic frontier analysis; Technical efficiency

Assessing Technical Inefficiency in Ecosystem Service Provision from an Input Perspective in the Cross Timbers region, United States.

We modeled the efficiency of ecosystem service provision-specifically timber production, carbon sequestration, and water yield-in the Cross Timbers region of the United States using stochastic frontier analysis from an input perspective. Inputs considered included natural capital and control variables such as temperature, precipitation, soil moisture, and natural disturbances, among others, that impact ecosystem service production. Inefficiency was modeled as a function of factors such as ownership, forest productivity, and natural disturbances. We utilized forest plot-level data obtained from the Forest Inventory and Analysis (FIA) program between 2008 and 2019. Our results indicated that ecosystem service production increased with higher levels of natural capital, higher temperatures, mesic soils, the presence of oaks, and damage caused by abiotic factors. We found evidence of technical inefficiency in the simultaneous provision of ecosystem services. From an input perspective, our findings revealed that, on average, 15.9% more input is used due to technical inefficiency in the Cross Timbers region. Specifically, private ownership and damage caused by abiotic factors resulted in excess input use of 16.4% and 14.3%, respectively, due to technical inefficiency. Managing the encroachment of invasive species like eastern redcedar can enhance ecosystem service production in the region, despite the high implementation costs. Collaboration among multidisciplinary extension professionals can help create comprehensive land management plans for the Cross Timbers, while landowners can also utilize cost-share programs to lower management expenses.