lowe: Lowe productivity and profitability index

Description Usage Arguments Details Value Warning Note Author(s) References See Also Examples

View source: R/lowe.R

Description

Using Data Envelopment Analysis (DEA), this function measures productivity and profitability in levels and changes with Lowe index.

Deflated shadow prices of inputs and outputs can also be computed.

Usage

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lowe(data, id.var, time.var, x.vars, y.vars, w.vars, p.vars, tech.change = TRUE, 
  tech.reg = TRUE, rts = c("vrs", "crs", "nirs", "ndrs"), orientation = c("out", 
  "in", "in-out"), parallel = FALSE, cores = max(1, detectCores() - 1), scaled = TRUE, 
  by.id = NULL, by.year = NULL, shadow = FALSE)

## S3 method for class 'Lowe'
print(x, digits = NULL, ...)

Arguments

data

A dataframe containing the required information for measuring productivity and profitability.

id.var

Firms' ID variable. Can be an integer or a text string.

time.var

Time period variable. Can be an integer or a text string.

x.vars

Input quantity variables. Can be a vector of text strings or integers.

y.vars

Output quantity variables. Can be a vector of text strings or integers.

w.vars

Input price variables. Can be a vector of text strings or integers.

p.vars

Output price variables. Can be a vector of text strings or integers.

tech.change

Logical. If TRUE (default), the model allows for technological change. If FALSE, technological change is prohibited. See also the Details section.

tech.reg

Logical. If TRUE (default), the model allows for negative technological change (i.e. technological regress). If FALSE, only positive technological change (i.e. technological progress) is allowed. See also the Details section.

rts

Character string specifying the returns to scale assumption. The default value is "vrs" (variable returns to scale). Other possible options are "crs" (constant returns to scale), "nirs" (non-increasing returns to scale), or "ndrs" (non-decreasing returns to scale).

orientation

Character string specifying the orientation. The default value is "out" (output-orientation). Other possible options are "in" (input-orientation), and "in-out" (both input- and output-orientations). For "in-out", the geometric mean of input- and output-orientations' results is returned.

parallel

Logical. Allows parallel computation. If FALSE (default) the estimation is conducted in sequential mode. If TRUE, parallel mode is activated using the number of cores specified in cores. When the sample size is small, it is recommended to keep the parallel option to its default value (FALSE).

cores

Integer. Used only if parallel = TRUE. It specifies the number of cores to be used for parallel computation. By default, cores = max(1, detectCores() - 1).

scaled

Logical. If TRUE (default), input and output quantities are rescaled. If FALSE, a warning message is displayed when very large (>1e5) and/or very small (<1e-4) values are present in the input and output quantity variables. See also the Details section.

by.id

Integer specifying the reference observation used for computing the indices (Optional). by.id must range between one and the total number of firms per period. See also the Details section.

by.year

Integer specifying the reference year used for computing the indices (Optional). by.year must range between one and the total number of time periods. See also the Details section.

shadow

Logical. Default is FALSE (no shadow prices are returned). When set to TRUE, input and output shadow prices are returned. These shadow prices are informative only and may be subject to the linear programming solver used.

x

An object of class 'Lowe'.

digits

The minimum number of significant digits to be printed in values. Default = max(3, getOption("digits") - 3).

...

Currently not used.

Details

When tech.change is set to FALSE, this overrides the effect of tech.reg.

Setting scaled = FALSE (no rescaling of data) may lead to numerical problems in solving LP problems while optimizing DEA models. In extreme cases it may also prevent models from being optimized.

By default by.id = NULL and by.year = NULL. This means that in the computation of change indices, each observation is by default compared to itself in the first period. by.id and by.year allow to specify a reference (e.g. a specific observation in a specific period). If by.id is specified and by.year = NULL, then the reference observation is by.id in the first period. If by.year is specified and by.id = NULL, then each observation is compared to itself in the specified period of time.

The Lowe index is also a fixed-weights-based TFP index as the F<c3><a4>re-Primont. The Lowe index uses the average observed input and output prices as aggregators.

Value

lowe() returns a list of class 'Lowe' for which a summary of productivity and profitability measures in levels and changes, as well as a summary shadow prices (if shadow = TRUE), is printed.

This list contains the following items:

Levels

Several elements are provided, depending on the orientation specified:

REV Revenues
COST Costs
PROF Profitability
P Aggregated output prices
W Aggregated input prices
TT Terms of trade (i.e. P/W)
AO Aggregated outputs
AI Aggregated inputs
TFP Total Factor Productivity (TFP)
MP Maximum productivity
TFPE TFP efficiency score
OTE Output-oriented technical efficiency score (orientation = "out")
OSE Output-oriented scale efficiency score (orientation = "out")
OME Output-oriented mix efficiency score (orientation = "out")
ROSE Residual output-oriented scale efficiency score (orientation = "out")
OSME Output-oriented scale-mix efficiency score (orientation = "out")
ITE Input-oriented technical efficiency score (orientation = "in")
ISE Input-oriented scale efficiency score (orientation = "in")
IME Input-oriented mix efficiency score (orientation = "in")
RISE Residual input-oriented scale efficiency score (orientation = "in")
ISME Input-oriented scale-mix efficiency score (orientation = "in")
OTE.ITE Geometric mean of OTE and ITE (orientation = "in-out")
OSE.ISE Geometric mean of OSE and ISE (orientation = "in-out")
OME.IME Geometric mean of OME and IME (orientation = "in-out")
ROSE.RISE Geometric mean of ROSE and RISE (orientation = "in-out")
OSME.ISME Geometric mean of OSME and ISME (orientation = "in-out")
RME Residual mix efficiency score
RE Revenue efficiency (orientation = "out")
CE Cost efficiency (orientation = "in")
RE.CE Geometric mean of RE and CE (orientation = "in-out")
Changes

Change indices of the different elements of Levels are provided. Each change is prefixed by "d" (e.g. profitability change is denoted dPROF, output-oriented efficiency change is denoted dOTE, etc.).

Shadowp

Returned only if shadow = TRUE. It contains the deflated cost input (x.vars) shadow prices and the deflated revenue output (y.vars) shadow prices.

From an object of class 'Lowe' obtained from lowe(), the

Warning

The lowe() function will not work with unbalanced panel data.

The Lowe index may be sensitive to the rescaling.

For extreme efficient observations, the problem of multiple solutions may arise and the values of shadow prices may differ depending on the linear programming solver used (here lpSolveAPI).

Note

All output-oriented efficiency scores are computed a la Shephard, while all input-oriented efficiency scores are computed a la Farrell. Hence, all efficiency scores are greater than zero and are lower or equal to one.

Author(s)

K Herv<c3><a9> Dakpo, Yann Desjeux, Laure Latruffe

References

O'Donnell C.J. (2008), An aggregate quantity-price framework for measuring and decomposing productivity and profitability change. School of Economics, University of Queensland, Australia. URL: https://www.uq.edu.au/economics/cepa/docs/WP/WP072008.pdf

O'Donnell C.J. (2011), The sources of productivity change in the manufacturing sectors of the U.S. economy. School of Economics, University of Queensland, Australia. URL: http://www.uq.edu.au/economics/cepa/docs/WP/WP072011.pdf

O'Donnell C.J. (2012), Nonparametric estimates of the components of productivity and profitability change in U.S. Agriculture. American Journal of Agricultural Economics, 94(4), 873–890. https://doi.org/10.1093/ajae/aas023

See Also

See Levels to retrieve a data frame with Lowe productivity and profitability in levels and components.
See Changes to retrieve a data frame with Lowe productivity and profitability changes and components.
See Shadowp to retrieve deflated input and output shadow prices, provided that shadow = TRUE.

See also fareprim for computations with an alternative transitive index.

Examples

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## Lowe profitability and productivity levels and changes' computations
## Not run: 
  Lowe.prod <- lowe(data = usagri, id.var = "States", time.var = "Years", x.vars = c(7:10), 
  y.vars = c(4:6), w.vars = c(14:17), p.vars = c(11:13), orientation = "in-out", by.id = 1, 
  by.year = 1)
  Lowe.prod

## End(Not run)

Example output

* Please cite the 'productivity' package as:
  Dakpo K.H., Desjeux Y. and Latruffe L. (2018). productivity: Indices of Productivity and Profitability Using Data Envelopment Analysis (DEA). R package version 1.1.0.

See also: citation("productivity")

* For any questions, suggestions, or comments on the 'productivity' package, please make use of Tracker facilities at:
  https://r-forge.r-project.org/projects/productivity/

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Loading required package: iterators
Loading required package: parallel

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Lowe productivity and profitability levels (summary):

      REV                COST               PROF              P          
 Min.   :   51852   Min.   :   65626   Min.   :0.4827   Min.   :1027059  
 1st Qu.: 1493904   1st Qu.: 1617473   1st Qu.:0.7983   1st Qu.:1415786  
 Median : 3926819   Median : 4277850   Median :0.8901   Median :1553516  
 Mean   : 4889511   Mean   : 5137308   Mean   :0.9190   Mean   :1579664  
 3rd Qu.: 6154740   3rd Qu.: 6450927   3rd Qu.:1.0143   3rd Qu.:1716471  
 Max.   :35628145   Max.   :24027241   Max.   :1.5416   Max.   :2384726  
       W                 TT               AO                 AI          
 Min.   : 487397   Min.   :0.7701   Min.   : 0.02356   Min.   : 0.04291  
 1st Qu.:1025751   1st Qu.:1.1812   1st Qu.: 0.97224   1st Qu.: 1.54111  
 Median :1177871   Median :1.3256   Median : 2.69449   Median : 3.82375  
 Mean   :1167683   Mean   :1.4100   Mean   : 3.17071   Mean   : 4.48176  
 3rd Qu.:1311215   3rd Qu.:1.5544   3rd Qu.: 4.01923   3rd Qu.: 5.64282  
 Max.   :1991798   Max.   :3.3208   Max.   :21.35709   Max.   :19.26621  
      TFP               MP             TFPE           OTE.ITE      
 Min.   :0.2586   Min.   :1.108   Min.   :0.1924   Min.   :0.5321  
 1st Qu.:0.5445   1st Qu.:1.242   1st Qu.:0.4333   1st Qu.:0.8194  
 Median :0.6442   Median :1.282   Median :0.4976   Median :0.9267  
 Mean   :0.6917   Mean   :1.282   Mean   :0.5405   Mean   :0.8980  
 3rd Qu.:0.7980   3rd Qu.:1.345   3rd Qu.:0.6148   3rd Qu.:1.0000  
 Max.   :1.4479   Max.   :1.448   Max.   :1.0000   Max.   :1.0000  
    OSE.ISE          OME.IME         ROSE.RISE        OSME.ISME     
 Min.   :0.7772   Min.   :0.5011   Min.   :0.3867   Min.   :0.2732  
 1st Qu.:0.9686   1st Qu.:0.7011   1st Qu.:0.6863   1st Qu.:0.4883  
 Median :0.9959   Median :0.7815   Median :0.7543   Median :0.5698  
 Mean   :0.9759   Mean   :0.7878   Mean   :0.7531   Mean   :0.6004  
 3rd Qu.:1.0000   3rd Qu.:0.8760   3rd Qu.:0.8289   3rd Qu.:0.7053  
 Max.   :1.0000   Max.   :1.0000   Max.   :1.0000   Max.   :1.0000  
      RME             RE.CE       
 Min.   :0.2755   Min.   :0.3313  
 1st Qu.:0.5077   1st Qu.:0.5891  
 Median :0.5895   Median :0.6983  
 Mean   :0.6148   Mean   :0.7110  
 3rd Qu.:0.7156   3rd Qu.:0.8123  
 Max.   :1.0000   Max.   :1.0000  


Lowe productivity and profitability changes (summary):

      dREV              dCOST             dPROF              dP        
 Min.   : 0.01645   Min.   :0.02133   Min.   :0.4712   Min.   :0.8241  
 1st Qu.: 0.47396   1st Qu.:0.52570   1st Qu.:0.7793   1st Qu.:1.1360  
 Median : 1.24584   Median :1.39036   Median :0.8689   Median :1.2465  
 Mean   : 1.55127   Mean   :1.66970   Mean   :0.8971   Mean   :1.2675  
 3rd Qu.: 1.95269   3rd Qu.:2.09664   3rd Qu.:0.9901   3rd Qu.:1.3772  
 Max.   :11.30357   Max.   :7.80919   Max.   :1.5048   Max.   :1.9134  
       dW              dTT              dAO                dAI         
 Min.   :0.4866   Min.   :0.6189   Min.   :0.009317   Min.   :0.01397  
 1st Qu.:1.0240   1st Qu.:0.9493   1st Qu.:0.384438   1st Qu.:0.50172  
 Median :1.1759   Median :1.0653   Median :1.065443   Median :1.24484  
 Mean   :1.1657   Mean   :1.1332   Mean   :1.253746   Mean   :1.45906  
 3rd Qu.:1.3090   3rd Qu.:1.2492   3rd Qu.:1.589266   3rd Qu.:1.83705  
 Max.   :1.9885   Max.   :2.6689   Max.   :8.444922   Max.   :6.27223  
      dTFP             dMP            dTFPE           dOTE.ITE     
 Min.   :0.3141   Min.   :1.000   Min.   :0.2588   Min.   :0.5962  
 1st Qu.:0.6614   1st Qu.:1.121   1st Qu.:0.5831   1st Qu.:0.9181  
 Median :0.7824   Median :1.157   Median :0.6696   Median :1.0383  
 Mean   :0.8401   Mean   :1.157   Mean   :0.7273   Mean   :1.0062  
 3rd Qu.:0.9692   3rd Qu.:1.214   3rd Qu.:0.8273   3rd Qu.:1.1204  
 Max.   :1.7586   Max.   :1.307   Max.   :1.3456   Max.   :1.1204  
    dOSE.ISE         dOME.IME        dROSE.RISE       dOSME.ISME    
 Min.   :0.7782   Min.   :0.5389   Min.   :0.4318   Min.   :0.3281  
 1st Qu.:0.9698   1st Qu.:0.7541   1st Qu.:0.7663   1st Qu.:0.5865  
 Median :0.9971   Median :0.8406   Median :0.8423   Median :0.6844  
 Mean   :0.9771   Mean   :0.8474   Mean   :0.8410   Mean   :0.7211  
 3rd Qu.:1.0012   3rd Qu.:0.9422   3rd Qu.:0.9256   3rd Qu.:0.8470  
 Max.   :1.0012   Max.   :1.0755   Max.   :1.1166   Max.   :1.2010  
      dRME            dRE.CE      
 Min.   :0.3305   Min.   :0.3993  
 1st Qu.:0.6089   1st Qu.:0.7098  
 Median :0.7071   Median :0.8415  
 Mean   :0.7375   Mean   :0.8568  
 3rd Qu.:0.8583   3rd Qu.:0.9789  
 Max.   :1.1995   Max.   :1.2051  

productivity documentation built on May 1, 2019, 8:19 p.m.