Decomposition of quality changes: Focusing on subjective quality of life

Abstract

Data envelopment analysis is a data-driven tool for building a composite index. Fare et al. (1995) proposed an attribute-incorporated data envelopment analysis where a Malmquist productivity index including attributes was formulated. The attribute-incorporated Malmquist productivity index was decomposed into quality change, efficiency change, and technical change. However, this attribute-incorporated Malmquist productivity index may yield incorrect results due to the fact that its separable multiplier only considers the reference technology and ignores the corresponding period data. This current paper proposes a revised decomposition version of the attribute-incorporated Malmquist productivity index. In addition, we propose an aggregate quality change model which is extended from Färe et al. (1995), where subjective quality and objective quality are considered at the same time. The aggregate quality change model is useful for measuring changes in the quality of life. An application in this paper shows that, within quality attributes, subjective quality of life has a more significant impact on the overall urban quality of life than objective quality of life.