A Comparison of Regression Analysis and Data Envelopment Analysis as Alternative Methods for Performance Assessments

Abstract

This paper compares regression analysis and data envelopment analysis as two alternative methods for assessing the comparative performance of homogeneous organizational units such as bank branches or schools. The comparison is restricted to units using a single resource or securing a single output. It focuses on the estimates of relative efficiency, marginal input-output values and target input-output levels that the two methods offer. A set of hypothetical hospitals is used to illustrate the performance of the two methods. It is found that, in general, data envelopment analysis outperforms regression analysis on accuracy of estimates but regression analysis offers greater stability of accuracy.