A substantial literature has dealt with the problem of estimating multiple-input and multiple-output production functions, where inputs and outputs can be good and bad. Numerous studies can be found ...in the areas of productivity analysis, industrial organization, labor economics, and health economics. While many papers have estimated the more restrictive output- and input-oriented distance functions, here we estimate a more general directional distance function. A seminal paper on directional distance functions by Chambers (1998) as well as papers by Färe et al. (1997), Chambers et al. (1998), Färe and Grosskopf (2000), Grosskopf (2003), Färe et al. (2005), and Hudgins and Primont (2007) do not address the issue of how to choose an optimal direction set. Typically the direction is arbitrarily selected to be 1 for good outputs and −1 for inputs and bad outputs. By estimating the directional distance function together with the first-order conditions for cost minimization and profit maximization using Bayesian methods, we are able to estimate optimal firm-specific directions for each input and output which are consistent with allocative and technical efficiency. We apply these methods to an electric-utility panel data set, which contains firm-specific prices and quantities of good inputs and outputs as well as the quantities of bad inputs and outputs. Estimated firm-specific directions for each input and output are quite different from those normally assumed in the literature. The computed firm-specific technical efficiency, technical change, and productivity change based on estimated optimal directions are substantially higher than those calculated using fixed directions.
Coal‐fired power plants minimize costs subject to output and emission constraints. We model the plants' choice of coal quality and emission abatement to minimize costs under these constraints, ...allowing for heterogeneous unobserved generation productivity and abatement efficiency. We derive and estimate the plants' cost functions to recover the production technologies. Our data set is a balanced panel of 76 U.S. coal‐fired power plants from 1995 to 2005, when the emission permit trading system was viable. We find a dramatic growth in abatement efficiency, a major goal of the Acid Rain Program. By contrast, the growth in generation productivity is positive but small.
•Consistency with materials-balance constraints.•Two functional relationships that impose materials balance.•Modeling production of bad outputs and use of bad inputs.•Balanced panel of 80 U.S. ...electricity plants, 1995–2005.•Substantial differences with conventional approach that omits them.
Previous research has frequently estimated the directional technology distance function (DTDF) to more flexibly model multiple-input and multiple-output production, firm inefficiency, and productivity growth. For example, with firms such as electric utilities, one must model the production of good and bad outputs using good and bad inputs. Typically, all inputs and outputs are potentially endogenous. In previous work, we show how to identify a DTDF system using price equations based on profit maximization and compute optimal directions for measuring productivity change. However, this work has not imposed restrictions that limit substitution possibilities among inputs and outputs to a feasible set that is consistent with materials-balance constraints. Such constraints require that the weight of all inputs equals the weight of all outputs. The major innovation of this paper is that we include two types of functional relationships that impose the parametric analog of materials balance by modeling the generation of bad outputs and the use of bad inputs. The first requires that bad outputs are functionally related to good inputs and bad inputs. The second requires that bad inputs are functionally related to good inputs. We illustrate these methods using a balanced panel of 80 U.S. coal-fired electric generating plants from 1995–2005. Substantial differences are observed between the specification that includes the materials-balance constraints and the conventional approach that omits them, based on Bayes factors as well as measures of productivity and inefficiency. For many plants, improved management practices can reduce substantial inefficiencies in meeting emission constraints without reducing productivity growth.
Researchers employ the directional distance function (DDF) to estimate multiple-input and multiple-output production, firm inefficiency, and productivity growth. We relax restrictive assumptions by ...computing optimal directions subject to profit maximization and cost minimization, correct for the potential endogeneity of inputs and outputs, estimate latent prices for bad outputs, measure firms’ responses to shadow prices rather than actual prices, and introduce an unobserved productivity term into the DDF. For an unbalanced panel of U.S. electric utilities, a model assuming profit-maximization outperforms one assuming cost-minimization, while lagged productivity and energy price have the greatest effect on productivity.
There is little data to inform use of renin angiotensin aldosterone system (RAAS) inhibitors in pediatric patients with systemic lupus erythematosus (SLE). Here, we sought to characterize RAAS ...inhibitor use in pediatric SLE and determine whether early RAAS inhibitor initiation among children with incident lupus nephritis is associated with decreased duration of chronic glucocorticoid exposure. A retrospective cohort study was performed of children (ages 5-18) with SLE and/or lupus nephritis in the Truven MarketScan™ Medicaid and Commercial databases (2013-2018) and estimated RAAS inhibitor use. Among incident nephritis cases, we used competing risk hazard models with inverse probability of treatment weighting to estimate the association between RAAS inhibitor initiation less than 180 days after diagnosis and time to glucocorticoid discontinuation with kidney failure as a competing event. Among 592 children with nephritis and 1407 children with non-kidney SLE, 67% and 15% ever received RAAS inhibitors, respectively. Median duration of RAAS inhibitor use among 323 incident users was 14 and 9 months in children with and without nephritis, respectively. Medicaid enrollment was independently associated with greater likelihood of RAAS inhibitor use, irrespective of nephritis. Among 158 incident nephritis cases, early RAAS inhibitor initiation was significantly associated with a faster rate of glucocorticoid discontinuation (adjusted sub-distribution hazard ratio 1.81, 95% confidence interval 1.09 – 3.00). Thus, early initiation of RAAS inhibitors may have a role in children newly diagnosed with lupus nephritis; not only those with refractory proteinuria after induction therapy. Hence, integrated health systems data could be leveraged to confirm these findings and optimize adjunctive therapies in pediatric lupus.
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Airlines use robust scheduling to mitigate the impact of unforeseeable disruptions on profits. We examine how effectively three common practices—flexibility to swap aircraft, flexibility to reassign ...gates, and scheduled aircraft downtime—accomplish this goal. We first estimate a multiple-input, multiple-outcome production frontier, which defines the attainable set of outcomes from given inputs. We then recover unobserved input costs and calculate how expenditure on inputs affects outcomes and revenues. We find that the per-dollar return from expenditure on gates, or more effective management of existing gate capacity, is three times larger than the per-dollar returns from other inputs. Next, we use the estimated trade-offs faced by carriers along the frontier to measure the value to carriers of reducing delays. Finally, we calculate the improvement in carriers’ outcomes and profits if their operational inefficiencies are eliminated. On average, we estimate that operational inefficiencies cost carriers about $1.7 billion in revenue annually.
This paper was accepted by Serguei Netessine, operations management
.
Purpose
The paper investigates the production inefficiency of the US electricity industry in the wake of restructuring and emission reduction regulations.
Design/methodology/approach
The study ...estimates a multiple-input, multiple-output directional distance function, using six inputs: fuel, labor, capital and annualized capital costs of sulfur dioxide (SO
2)
, nitrogen oxides (NO
X
) and particulate removal devices, two good outputs – residential and industrial-commercial electricity and three bad outputs – SO
2
, carbon dioxide (CO
2
) and NO
X
emissions.
Findings
The authors find that restructuring in electricity markets improves deregulated utilities' technical efficiency (TE). Deregulated utilities with below-average NO
X
control equipment tend to invest less in these devices, but above-average utilities do the opposite. The reverse applies to particulate removal devices. The whole sample spends more on NO
X
, particulate and SO
2
control systems and reduces its electricity sales slightly. Increased investments in SO
2
and NO
X
control equipment do not reduce SO
2
and NO
X
emissions, but expansions of particulate control systems cut down SO
2
emissions greatly. Stricter environmental regulations have probably shifted the production frontier inwards and the utilities farther from the frontier over time.
Practical implications
Restructuring and environmental regulations do not make all utilities invest more in emission control systems. The US government should devise other schemes to achieve this goal.
Originality/value
The paper unveils heterogeneous reactions of US electric utilities in the wake of restructuring and emission regulations.
The spike glycoprotein of severe acute respiratory syndrome coronavirus-2 (SARS-CoV-2) continues to accumulate substitutions, leading to breakthrough infections of vaccinated individuals. It remains ...unclear if exposures to antigenically distant SARS-CoV-2 variants can overcome memory B cell biases established by initial SARS-CoV-2 encounters. We determined the specificity and functionality of antibody and B cell responses following exposure to BA.5 and XBB variants in individuals who received ancestral SARS-CoV-2 mRNA vaccines. BA.5 exposures elicited antibody responses that targeted epitopes conserved between the BA.5 and ancestral spike. XBB exposures also elicited antibody responses that primarily targeted epitopes conserved between the XBB.1.5 and ancestral spike. However, unlike BA.5, a single XBB exposure elicited low frequencies of XBB.1.5-specific antibodies and B cells in some individuals. Pre-existing cross-reactive B cells and antibodies were correlated with stronger overall responses to XBB but weaker XBB-specific responses, suggesting that baseline immunity influences the activation of variant-specific SARS-CoV-2 responses.
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•Variant breakthrough infections boost ancestral cross-reactive antibodies and B cells•First and second BA.5 exposures fail to elicit variant-specific antibodies and B cells•XBB infections and vaccinations elicit XBB-specific responses in some individuals•XBB-specific responses correlate with low levels of pre-existing humoral immunity
It is unknown if antigenically distant SARS-CoV-2 variants can overcome memory B cell biases established by initial SARS-CoV-2 encounters. Johnston, Painter, Li et al. show that BA.5 and XBB exposures recall B cells targeting conserved epitopes in the ancestral SARS-CoV-2 spike protein. They found instances of XBB-specific responses after XBB exposures, which correlated with low baseline levels of humoral immunity.
Because of its greater flexibility, the directional distance function (DDF) has been employed with increasing frequency to estimate multiple-input and multiple-output production, where inputs and ...outputs can be good or bad. However, typically researchers make three restrictive assumptions. First, they assume a direction of movement of firm production toward the frontier. Second, they assume that actual quantities of inputs and outputs are allocatively or price efficient. Third, they assume exogeneity of all inputs and all outputs, except for the normalized one. The first contribution of this paper is to include parameters to estimate optimal directions which correspond to the firm’s profit-maximizing (PM) position. The second contribution is to generalize the DDF to a shadow-quantity DDF. This entails adding distortion parameters to each input and output quantity of the DDF, creating shadow quantities. To estimate the shadow quantities and the structural parameters, we form the shadow DDF system, which includes the shadow DDF and all the first-order price equations from the shadow-PM problem. These include prices for bad inputs and bad outputs, where we approximate their missing prices for use in their first-order price equations. The third contribution is that we estimate the shadow DDF system using a Generalized Method of Moments approach, where all variables are potentially endogenous. This approach is simpler than the Bayesian one employed in Atkinson et al. (Estimating efficient production with bad inputs and outputs using latent prices and optimal directions. Working paper, University of Georgia, Athens,
2016
), which estimated shadow prices and optimal directions. Using the same data set, both sets of results are qualitatively very similar, although they differ somewhat quantitatively.
Performing adequately powered clinical trials in pediatric diseases, such as SLE, is challenging. Improved recruitment strategies are needed for identifying patients.
Electronic health record ...algorithms were developed and tested to identify children with SLE both with and without lupus nephritis. We used single-center electronic health record data to develop computable phenotypes composed of diagnosis, medication, procedure, and utilization codes. These were evaluated iteratively against a manually assembled database of patients with SLE. The highest-performing phenotypes were then evaluated across institutions in PEDSnet, a national health care systems network of >6.7 million children. Reviewers blinded to case status used standardized forms to review random samples of cases (
=350) and noncases (
=350).
Final algorithms consisted of both utilization and diagnostic criteria. For both, utilization criteria included two or more in-person visits with nephrology or rheumatology and ≥60 days follow-up. SLE diagnostic criteria included absence of neonatal lupus, one or more hydroxychloroquine exposures, and either three or more qualifying diagnosis codes separated by ≥30 days or one or more diagnosis codes and one or more kidney biopsy procedure codes. Sensitivity was 100% (95% confidence interval 95% CI, 99 to 100), specificity was 92% (95% CI, 88 to 94), positive predictive value was 91% (95% CI, 87 to 94), and negative predictive value was 100% (95% CI, 99 to 100). Lupus nephritis diagnostic criteria included either three or more qualifying lupus nephritis diagnosis codes (or SLE codes on the same day as glomerular/kidney codes) separated by ≥30 days or one or more SLE diagnosis codes and one or more kidney biopsy procedure codes. Sensitivity was 90% (95% CI, 85 to 94), specificity was 93% (95% CI, 89 to 97), positive predictive value was 94% (95% CI, 89 to 97), and negative predictive value was 90% (95% CI, 84 to 94). Algorithms identified 1508 children with SLE at PEDSnet institutions (537 with lupus nephritis), 809 of whom were seen in the past 12 months.
Electronic health record-based algorithms for SLE and lupus nephritis demonstrated excellent classification accuracy across PEDSnet institutions.
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