Demographic Efficiency: Concept and Estimation

Abstract

The concept of ‘demographic efficiency’ is proposed and data envelopment analysis (DEA) is introduced as a method for determining which countries are demographically efficient. While the purpose of the paper is primarily to introduce the concept and the method, several simple examples are used for purposes of illustration. The first two explore how efficiently countries have converted their level of development (the ‘input’) into male and female life expectancy at birth (the ‘outputs’). The second two reverse the postulated relationship, treating life expectancies as inputs reflecting general health status of a population, and level of development as the output. Countries are said to be efficient if they have achieved the maximum output observable for a given level of input, or if they have minimized the inputs needed to achieve a prescribed level of output. Together, the efficient cases form an ‘efficiency frontier.’ DEA, a form of linear programming, also permits the degree of inefficiency of countries lying behind this frontier to be measured by calculating the extent of the ‘output slacks’ that are present. Output slacks are the shortfalls in the level of performance that could have been achieved given the inputs available, and may themselves be treated as independent variables in explorations of the sources of demographic inefficiency. One example of such an exploration is offered—an attempt to account for shortfalls in female life expectancy, given levels of development.