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Title: Aggregating Farrell efficiencies without value data: The case of hospitals
Authors: Färe, Rolf
Karagiannis, Giannis
Type: Article
Subjects: FRASCATI::Social sciences
FRASCATI::Social sciences::Economics and Business
Keywords: Hospital efficiency
Aggregation weights
Shannon entropy
Data envelopment analysis
Issue Date: Dec-2022
Publisher: Elsevier
Source: Socio-Economic Planning Sciences
Volume: 84
First Page: 101393
Abstract: This paper provides an alternative approach for computing aggregation weights for Farrell-type efficiencies when value (revenue or cost) data are not available. This alternative approach relies on Shannon entropy, which has a central role in information theory, and provides an objective weighting that fully exploits the information of the data at hand. Its main advantages are that it is easy to implement and it is readily applicable in all cases. We illustrate the applicability of the proposed approach by analyzing aggregate performance measures (i.e., technical efficiency, scale efficiency and capacity utilization) for public hospitals in Greece. Compared with simple average measures, we found aggregate measures to be lower for technical inefficiency and higher for scale inefficiency and capacity utilization. We also found that Greek public hospitals with above average size tend to have below average technical inefficiency and vice versa while those with above average size tend to have above average scale inefficiency and capacity utilization rate and vice versa.
ISSN: 0038-0121
Other Identifiers: 10.1016/j.seps.2022.101393
Appears in Collections:Department of Economics

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