I believe the measure of cost inefficiency will be be between one
(maximum efficiency) and infinity. It is measuring inefficiency as
the ratio of observed cost to minimum cost. Equivalently, the inverse,
which will be is less than or equal to one, could be used as a
measure cost of efficiency.
See also this thread:
http://www.stata.com/statalist/archive/2005-06/msg00578.html
Scott
On 6/20/07, Alexander Kalb <[email protected]> wrote:
Dear Statalist-members,
I estimated a time-varying panel data cost frontier model with the
command "xtfrontier depvar [indepvars] [if] [in] [weight] , tvd". After
the estimation I wanted to get the efficiency scores with the command
"predict efficiency, te". Now I wonder why this estimates are not
bounded above 1, because they range from 1.439743 to 6.81706. I thought
the most efficient unit should get a 1 and all other (more inefficient)
units should get a number higher than 1. Can anybody explain this to
me?
Thank you for your help,
Alex
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