Negative data in DEA: a simple proportional distance function approach

The need to adapt Data Envelopment Analysis (DEA) and other frontier models in the context of negative data has been a rather neglected issue in the literature. A recent article in this journal proposed a variation on the directional distance function, a very general distance function that is dual to the profit function, to accommodate the occurrence of negative data. In this contribution, we define and recommend a generalised Farrell proportional distance function that can do the same job and that maintains a proportional interpretation under mild conditions. Journal of the Operational Research Society (2011) 62, 1413–1419. doi:10.1057/jors.2010.108 Published online 28 July 2010