Abstract.
When production functions are estimated as frontier functions, the deviations from the frontier can be interpreted as individual inefficiency estimates. Unfortunately, it has recently been shown that efficiency differences across individuals are very often statistically insignificant. In this paper, we will analyse the consequences of the consideration of confidence statements for the reliability of efficiency rankings. The stochastic frontier and confidence intervals derived by Horrace and Schmidt are compared to the COLS approach and bootstrap confidence intervals. The membership function is proposed as a simple Monte-Carlo approximation for the probability for an individual to be the most efficient in the sample.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
Author information
Authors and Affiliations
Additional information
First version received: May 1998/final version accepted: July 1999
Rights and permissions
About this article
Cite this article
Jensen, U. Is it efficient to analyse efficiency rankings?. Empirical Economics 25, 189–208 (2000). https://doi.org/10.1007/s001819900013
Issue Date:
DOI: https://doi.org/10.1007/s001819900013