Improving Finite Sample Approximation by Central Limit Theorems for DEA and FDH efficiency scores

We propose an improvement of the finite sample approximation of the central limit theorems (CLTs) that were recently derived for statistics involving production efficiency scores estimated via Data Envelopment Analysis (DEA) or Free Disposal Hull (FDH) approaches. The improvement is very easy to implement since it involves a simple correction of the already employed statistics without any additional computational burden and preserves the original asymptotic results such as consistency and asymptotic normality. The proposed approach persistently showed improvement in all the scenarios that we tried in variousMonte-Carlo experiments, especially for relatively small samples or relatively large dimensions (measured by total number of inputs and outputs) of the underlying production model. This approach therefore is expected to be valuable (and at almost no additional computational costs) for practitioners wishing to perform statistical inference about production efficiency using DEA or FDH approaches.