What is stochastic frontier approach?

What is stochastic frontier approach?

Stochastic frontier analysis (SFA) refers to a body of statistical analysis techniques used to estimate production or cost functions in economics, while explicitly accounting for the existence of firm inefficiency.

What is SFA in hospital?

There are two methods for evaluating the performance of hospitals and other healthcare providers, i.e., data envelopment analysis (DEA) and stochastic frontier analysis (SFA).

What is meta frontier analysis?

One approach that allows comparisons across different technologies is meta-frontier analysis. A meta-frontier is the envelope of all group frontiers, and provides a homogenous boundary for all heterogeneous groups. It thus represents the best-practice technology.

What is the difference between data envelopment analysis and stochastic frontier analysis?

Data Envelopment Analysis (DEA) is a non parametric data analytic technique that is extensively used by various research communities. Stochastic Frontier Approach (SFA) and Data Frontier Analysis (DFA) indicate a generally low level of technical efficiency with significant inefficiency differences among farms.

What is DEA and SFA?

DEA is a non-parametric approach that uses mathematical programming to identify the efficient frontier. SFA is a parametric approach that hypothesizes a functional form and use the data to econometrically estimate the parameters of that function using the entire set of DMUs.

What are the four types of stochastic process?

Based on their mathematical properties, stochastic processes can be grouped into various categories, which include random walks, martingales, Markov processes, Lévy processes, Gaussian processes, random fields, renewal processes, and branching processes.

Why is data envelopment analysis important?

Data envelopment analysis (DEA) is a nonparametric method in operations research and economics for the estimation of production frontiers. It is used to empirically measure productive efficiency of decision making units (DMUs).

What is Stochastic Frontier Analysis (SFA)?

Stochastic frontier analysis (SFA) have been widely used to measure efficiency within health economics and statistics (Bogetoft & Otto 2010; Olsen & Street 2008; Rosko & Mutter 2008).

What is the single-output stochastic frontier model?

This model generalizes the single-output stochastic frontier model to multiple-input, multiple-output technologies and allows simultaneous estimation of technical efficiency and analysis of influential variables on efficiency.

What is the difference between SFA and stochastic production function?

In the equation the SFA production function consists of the production function for each hospital department, where the department-specific stochastic component is a stochastic production function. This stochastic component consists of statistical noise and measurement errors. An important assumption of SFA is that and have different distributions.