Applying Stochastic Frontier Analysis to Identify a Technical Efficient Sustainable Development Model in Metropolitan Service Areas Open Access
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Determining a top performing model to identify factors to assess technical efficiency within Metropolitan Service Area’s (MSAs) is the focus of this research study. A Sustainable Development Goal (SDG) Index has been created and recently used within analysis of 100 large MSAs within the United States. The factors that composed the SDG Index were incorporated as inputs to a Stochastic Frontier Analysis (SFA) model and analyzed as a production function. The output of the model was the SDG Index. Several research questions arose and were answered within this research study. Are economic factors a better measurement than social factors in sustainability? How significant a role do environmental factors play in sustainability? Albany, NY was measured as the most efficient MSA within the methodology applied to this research. Infant mortality, share of renewable energy and the unemployment rate are factors that contribute to a higher performing model that only incorporates economic factors. The model developed is sensitive to the factors that are incorporated. SFA was successfully used to identify sustainable development inefficiency that is measurable by econometric performance. Further research includes comparing results from a parametric and non-parametric model such as SFA versus DEA, respectively. Lastly, determining a model that would test various improvement scenarios based on multiple sustainability factors can yield decision makers a customized model.Sustainable development incorporates social, economic and environmental global challenges that are being emphasized due to predicted urban growth by the year of 2030. The United States is not identified as the leader in sustainable development, in which progress is needed. Advancements within technology and parallel concepts such as smart cities have been developed to catalyze sustainable development and address geographic specific challenges. Sustainable Development advances previous United Nations’ initiatives and is a global humanitarian effort to make the world better.