On the inconsistency of the Malmquist-Luenberger index
Entidad
UAM. Departamento de Análisis Económico, Teoría Económica e Historia EconómicaEditor
UAM. Departamento de Análisis Económico, Teoría Económica e Historia EconómicaFecha de edición
2013Serie/Núm.
Economic Analysis Working Paper Series. 01/2013ISSN
1885-6888Materias
Data envelopment analysis; Malmquist-Luenberger productivity index; Technological change; Efficiency change; Directional distance function; EconomíaResumen
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
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Google Scholar:Aparicio, Juan
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Pastor, Jesús T
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Zofío Prieto, José Luis
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