Relevance of Disposability Assumptions for Efficiency Measurement

A recent article of Dakpo, Jeanneaux and Latruffe critically reviews the developments, limits and future prospects of integrating environmental aspects into productive efficiency evaluation with Data Envelopment Analysis (DEA). In particular, it is concluded that multiple frontier technologies are more promising than the widely-used weak disposability assumption. This note comments on some of these conclusions thereby focusing the relevance of disposability assumptions. The suitability of generic disposability assumptions for pollution technologies is discussed. Furthermore, it is questioned whether the usual free disposability assumption in case of no bads is necessary, at all. It is argued that adequate explicit disposability assumptions should be well justified for the individual technology of the considered transformation process – if they are necessary at all and not already implicitly contained in the envelopment of the DMUs