Technical efficiency bias in data envelopment analysis caused by intra-output aggregation

We show that an organization's technical efficiency scores are biased downward by linear aggregation of the quantities of the same type of output that are produced by multiple subunits (intro-output aggregation). We expand the models of Fare et al. (2002, 2004) and Barnum and Gleason (2005) to account for intro-output aggregation bias, yielding an expanded model in which technical efficiency is unbiased by any type of input or output aggregation. We illustrate intro-output aggregation bias with data envelopment analysis results from Canadian paratransit operations.