Restricted best practice selection in DEA: An overview with a case study evaluating the socio-economic performance of nations

We discuss modifications in the concept of efficiency that occur in Data Envelopment Analysis when best practice selection is subjected to additional constraints reflecting institutional circumstances, externalities, equity considerations or other extraneous information. Such additional constraints restrict the feasible production possibility set on the envelopment side problem. We provide an overview of constraints that may be present on the envelopment side; some of them mimic the well-known cone-ratio and assurance region models on the multiplier side problem. The discussion is mainly in terms of policy-based constraints that are external to the physical input-output relationships and instead reflect the institutional setting of the efficiency rankings, including considerations of the economic and social policy. A numerical example which rates the socio-economic performance of both developed and developing nations is provided to illustrate our model developments.