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http://hdl.handle.net/2451/26162
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| Title: | Distinguishing Between Heterogeneity and Inefficiency: Stochastic
Frontier Analysis of the World Health Organization’s Panel Data on
National Health Care Systems |
| Authors: | Greene, William |
| Keywords: | Panel data
fixed effects
random effects
random parameters
technical efficiency
stochastic frontier
heterogeneity
health care |
| Issue Date: | 20-Apr-2003 |
| Series/Report no.: | EC-03-10 |
| Abstract: | The most commonly used approaches to parametric (stochastic frontier)
analysis of efficiency in panel data, notably the fixed and random
effects models, fail to distinguish between cross individual
heterogeneity and inefficiency. This blending of effects is particularly
problematic in the World Health Organization’s (WHO) panel data
set on health care delivery, which is a 191 country, five year panel.
The wide variation in cultural and economic characteristics of the
worldwide sample of countries produces a large amount of unmeasured
heterogeneity in the data. Familiar approaches to inefficiency
estimation mistakenly measure that heterogeneity as inefficiency. This
study will examine a large number of recently developed alternative
approaches to stochastic frontier analysis with panel data, and apply
some of them to the WHO data. A more general, flexible model and several
measured indicators of cross country heterogeneity are added to the
analysis done by previous researchers. Results suggest that in these
data, there is considerable evidence of heterogeneity that in other
studies using the same data, has masqueraded as inefficiency. Our
results differ substantially from those obtained by several earlier researchers. |
| URI: | http://hdl.handle.net/2451/26162 |
| Appears in Collections: | Economics Working Papers
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