Dealing with outliers when setting targets by data envelopment analysis

Thanassoulis and Simpson outlined an approach for setting targets by DEA for individuals that will be realistic yet demanding. The approach featured the use of DEA to identify ‘exceptional’ individuals who should be dropped as potential referents so that the targets would be more realistic. The paper used the example of setting achievement targets for school children. The technical details to identifying exceptional individuals were contained in an Appendix that was inadvertently omitted from Thanassoulis and Simpson. This note presents the Appendix both in the context of setting targets and more generally as a method for identifying outliers.