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Re: st: Different result of Technical Efficiency with Frontier 4.1 and Stata


From   Federico Belotti <f.belotti@gmail.com>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: Different result of Technical Efficiency with Frontier 4.1 and Stata
Date   Tue, 1 Oct 2013 13:05:25 +0200

Vikash Vaibhav <vikashv@igidr.ac.in> found dramatically different results comparing Stata with Tim Coelli's Frontier 4.1.

First, I would like to ask to Vikash which Stata command has been used for the estimation. 

Second, in my experience the two softwares give exactly the same results. I compared the user-written command -sfpanel- (from SSC) and FRONTIER 4.1 for the Battese and Coelli (1995) model using a simulated dataset that can be downloaded at 

http://www.econometrics.it/data/FRONTIER41vsSFPANEL.zip

Data has been simulated from the following normal - truncated normal production model

y_it = 1 + 0.3 x1_it + 0.7 x2_it - u_it + v_it

where u_it is truncated normal with mean  

mu_it = 1 + 0.5 zmu_it 

and unit variance and v_it is normal with mean 0 and variance = 0.25.

To run the estimation in Stata you can use the data file "simd-dta.dta" and the do file "check.do".
To run FRONTIER 4.1 you can use the "dta.txt" and "ins.txt" files.

I didn't find appreciable differences, considering also that the two log-likelihoods (the -sfpanel- and FRONTIER 4.1 ones) are differently parametrized. So, I'm wondering if you have some problems in variables and/or instruction file definition. 

On the other hand, I found appreciable differences using real data but only when the data has been transformed using, for instance, the log_var = log(var+0.1) trick to get rid of the log-zero problem. Usually this kind of tricks creates huge disproportions in the data which can be handled differently by the optimization engine of different software. A useful discussion on this issue can be found at

http://stats.stackexchange.com/questions/30728/how-small-a-quantity-should-be-added-to-x-to-avoid-taking-the-log-of-zero

Hope this helps,
Federico


References
Battese, G., and T. Coelli. 1995. A model for technical ineciency effects in a stochastic frontier production function for panel data. Empirical Economics 20: 325-332.



On Oct 1, 2013, at 7:22 AM, Vikash Vaibhav wrote:

> This is with respect to the dramatically different result that i got when i
> compared the results of technical efficiency estimated from Frontier 4.1 and
> Stata. (two more student here has the same problem and with a different
> dataset). I do not think that it could have been due to differing
> algorithms or some other things that vary across statistical packages.
> I would like to point out the following observations:
> 
> 1. The results were different in case of cross section data. But they did
> not differ a lot.
> 2. The results for the panel data were hugely different with the two
> software.
> 
> I have used Stata IC version11.1 (for windows).
> I have used Frontier 4.1 package freely available on CEPA website.
> Any help ??
> 
> -- 
> Thanks & Regards,
> Vikash vaibhav
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-- 
Federico Belotti, PhD
Research Fellow
Centre for Economics and International Studies
University of Rome Tor Vergata
tel/fax: +39 06 7259 5627
e-mail: federico.belotti@uniroma2.it
web: http://www.econometrics.it


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