Implications of aggregated value data in economic efficiency analysis

This paper analyzes the implications of using aggregated value data for both inputs and outputs in Data Envelopment Analysis (DEA). It shows that when total cost and total revenue data is used, the estimated efficiency score reflects profitability efficiency which is composed of technical efficiency, allocative efficiencies on both the input and the output sides, and potential price effects if prices differ between decision-making units. The findings provide practical guidance for using value data in DEA and how to interpret efficiency scores in cases where disaggregated data and price information are not available. • Guidance on interpreting efficiency scores using aggregated value data in Data Envelopment Analysis (DEA). • DEA with total cost and total revenue data estimates profitability efficiency. • Unobserved price differences in value data can raise or lower efficiency estimates.