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All Journal Media Statistika East Java Economic Journal
Zulkarnain, Rizky
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Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Social Sciences

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UTILIZATION OF STUDENT’S T DISTRIBUTION TO HANDLE OUTLIERS IN TECHNICAL EFFICIENCY MEASUREMENT Zulkarnain, Rizky; Djuraidah, Anik; Sumertajaya, I Made; Indahwati, Indahwati
MEDIA STATISTIKA Vol 14, No 1 (2021): Media Statistika
Publisher : Department of Statistics, Faculty of Science and Mathematics, Universitas Diponegoro

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.14710/medstat.14.1.56-67

Abstract

Stochastic frontier analysis (SFA) is the favorite method for measuring technical efficiency. SFA decomposes the error term into noise and inefficiency components. The noise component is generally assumed to have a normal distribution, while the inefficiency component is assumed to have half normal distribution. However, in the presence of outliers, the normality assumption of noise is not sufficient and can produce implausible technical efficiency scores. This paper aims to explore the use of Student’s t distribution for handling outliers in technical efficiency measurement. The model was applied in paddy rice production in East Java. Output variable was the quantity of production, while the input variables were land, seed, fertilizer, labor and capital. To link the output and inputs, Cobb-Douglas or Translog production functions was chosen using likelihood ratio test, where the parameters were estimated using maximum simulated likelihood. Furthermore, the technical efficiency scores were calculated using Jondrow method. The results showed that Student’s t distribution for noise can reduce the outliers in technical efficiency scores. Student’s t distribution revised the extremely high technical efficiency scores downward and the extremely low technical efficiency scores upward. The performance of model was improved after the outliers were handled, indicated by smaller AIC value.
Environmental Efficiency of Rice Farming in East Java Zulkarnain, Rizky
East Java Economic Journal Vol. 9 No. 2 (2025)
Publisher : Kantor Perwakilan Bank Indonesia Provinsi Jawa Timur

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.53572/ejavec.v9i2.111

Abstract

Sustainable agriculture is not only global agenda, but also becomes national and regional agenda. Rice farming is a key factor of national food security, where East Java province has a vital role as the largest rice producer in Indonesia. Unfortunately, excessive practices in agriculture lead to detrimental impact on environment, such as greenhouse gas (GHG) emissions, land degradation and water pollution (eutrophication). This study aims to measure environmental efficiency of rice farming in East Java and also to analyze its determinants. This study employs stochastic frontier model to measure environmental efficiency as well as to examine the effects of various factors. The results shows that environmental efficiency of rice farming in East Java is generally low, with average score 0.463. This result suggests that there is opportunity to enhance environmental efficiency of rice farming in East Java by 53.7%. The low environmental efficiency is influenced by the low labor quality (education and managerial quality), low technology adoption, physical environment, and institutional environment (land ownership, counseling, credit access, social network). Based on this study, various policy interventions can be implemented to improve environmental efficiency.
Co-Authors Anik Djuraidah I Made Sumertajaya Indahwati