An application of the directional distance function with the number of accidents as an undesirable output to measure the technical efficiency of state road transport in India

By using the directional distance function (DDF) of data envelopment analysis (DEA), this study measures the technical efficiency of 37 Indian state road transport undertakings (SRTUs) for the year 2012-13. We employ the DDF as a tool for analyzing a joint production function with both desirable and undesirable outputs (i.e., the number of accidents). A comparison between the results with and without accidents shows that several SRTUs have experienced significant changes in their efficiency scores as well as in their rankings after accounting for the undesirable output. This indicates the importance of including the number of accidents - a safety standard - as representative of the undesirable output in computing the efficiency scores of SRTUs. The results of the Tobit model indicate that SRTUs with greater vehicle productivity are more efficient under both conventional DEA and DDF approaches. We also employed zero-truncated negative binomial model to assess the factors influencing the number of road accident experienced by the Indian SRTUs and found that the accident count was significantly influenced by fleet utilization and vehicle productivity.