INCORPORATING QUALITY INTO DATA ENVELOPMENT ANALYSIS - A STOCHASTIC-DOMINANCE APPROACH

The study is concerned with the incorporation of information on differ ences in quality into DEA. Three approaches for incorporation of quali ty in efficiency evaluations and corresponding criteria for efficiency are suggested. The three criteria are operationalized for use in empi rical analyses in a number of LP-models in the DEA-tradition and the l inks between the models and the microeconomic production theory are es tablished. A relationship between dominance criteria designed for an e valuation of quality and quantity performance and the notion of weak d isposability is shown to exist within the context of estimation of pro duction possibility sets. Preliminary results of an efficiency analysi s of public primary schools in Denmark based upon the suggested framew ork for quality-controlled efficiency evaluations are reported.