On the inconsistency of the Malmquist-Luenberger index
Entity
UAM. Departamento de Análisis Económico, Teoría Económica e Historia EconómicaPublisher
UAM. Departamento de Análisis Económico, Teoría Económica e Historia EconómicaDate
2013Serie/Num.
Economic Analysis Working Paper Series. 01/2013ISSN
1885-6888Subjects
Data envelopment analysis; Malmquist-Luenberger productivity index; Technological change; Efficiency change; Directional distance function; EconomíaAbstract
Apart from the well-known weaknesses of the standard Malmquist productivity index
related to infeasibility and not accounting for slacks, already addressed in the literature,
we identify a new and significant drawback of the Malmquist-Luenberger index
decomposition that questions its validity as an empirical tool for environmental
productivity measurement associated with the production of bad outputs. In particular,
we show that the usual interpretation of the technical change component in terms of
production frontier shifts can be inconsistent with its numerical value, thereby resulting
in an erroneous interpretation of this component that passes on to the index itself. We
illustrate this issue with a simple numerical example. Finally, we propose a solution for
this inconsistency issue based on incorporating a new postulate for the technology
related to the production of bad outputs
Files in this item
Google Scholar:Aparicio, Juan
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Pastor, Jesús T
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Zofío Prieto, José Luis
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