Efficiency in Public Sector: A Neural Network Approach

Here artificial neural networks (ANNs) are employed for efficiency purposes. First, the main features of ANNs are presented. Then, common techniques of the efficiency literature are reviewed: parametric (deterministic and stochastic) and non-parametric (Data Envelopment Analysis [DEA] and Free Disposal Hull [FDH]). ANNs are proposed for frontier approximation. Their advantages and drawbacks in the efficiency context are examined. Finally, these various methodologies are applied to refuse collection services using a sample of Spanish (Catalonian) municipalities. The results are compared with Pearson´s correlation and Spearman rank-correlation coefficients