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. Silva Portela, Thanassoulis, and Simpson (2004) proposed a variation on the directional distance function, a very general distance function that is dual to the profit function, to accommodate eventual negative data. In this contribution, we suggest a simple variation on the proportional distance function that can do the same job.