A comparison of DEA and SFA methods: a case study of farm households in Bangladesh

Non-parametric Data Envelopment Analysis (DEA) and parametric Stochastic Frontier Analysis (SFA) have become very popular in the analysis of productive efficiency. This study undertakes a comparison of the SFA and the constant returns to scale (CRS) and variable returns to scale (VRS) output-oriented DEA models, based on a sample of 240 farms in Bangladesh. However, the aim of this paper is not only to compare estimates of technical efficiency obtained from the two approaches, but also to examine the determinants of inefficiency. The detection and measurement of technical inefficiency and its determinants can be used as a basis of policy recommendations. The results from both the approaches indicated that there is a potential for increasing farm production through efficiency improvement and that farmers' age and educational level have a significant effect on efficiency.