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Influential observations in frontier models, a robust non-oriented approach to the water sector

Influential observations in frontier models, a robust non-oriented approach to the water sector This paper suggests an outlier detection procedure which applies a nonparametric model accounting for undesired outputs and exogenous influences in the sample. Although efficiency is estimated in a deterministic frontier approach, each potential outlier initially benefits of the doubt of not being an outlier. We survey several outlier detection procedures and select five complementary methodologies which, taken together, are able to detect all influential observations. To exploit the singularity of the leverage and the peer count, the super-efficiency and the order-m method and the peer index, it is proposed to select these observations as outliers which are simultaneously revealed as atypical by at least two of the procedures. A simulated example demonstrates the usefulness of this approach. The model is applied to the Portuguese drinking water sector, for which we have an unusually rich data set. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Annals of Operations Research Springer Journals

Influential observations in frontier models, a robust non-oriented approach to the water sector

Witte, Kristof; Marques, Rui
Annals of Operations Research , Volume 181 (1) – May 29, 2010
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References (51)

Publisher
Springer Journals
Copyright
Copyright © 2010 by The Author(s)
Subject
Business and Management; Operation Research/Decision Theory; Combinatorics; Theory of Computation
ISSN
0254-5330
eISSN
1572-9338
DOI
10.1007/s10479-010-0754-6
Publisher site
See Article on Publisher Site

Abstract

This paper suggests an outlier detection procedure which applies a nonparametric model accounting for undesired outputs and exogenous influences in the sample. Although efficiency is estimated in a deterministic frontier approach, each potential outlier initially benefits of the doubt of not being an outlier. We survey several outlier detection procedures and select five complementary methodologies which, taken together, are able to detect all influential observations. To exploit the singularity of the leverage and the peer count, the super-efficiency and the order-m method and the peer index, it is proposed to select these observations as outliers which are simultaneously revealed as atypical by at least two of the procedures. A simulated example demonstrates the usefulness of this approach. The model is applied to the Portuguese drinking water sector, for which we have an unusually rich data set.

Journal

Annals of Operations Research – Springer Journals

Published: May 29, 2010

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