This textbook provides an up-to-date treatment of the two-tier stochastic frontier model and its applications across the social sciences. It is a cohesive treatise on both the classical methods of estimation and inference and various machinations of the two-tier stochastic frontier model, as well as more recently developed tools that can shed new insight into why these opposing latent forces which affect economic, sociopolitical, and even psychological outcomes, exist, and to what extent. The text is intended to be a self-contained reference for practitioners to rely on when using these methods in their research, regardless of field. It includes sixteen empirical applications on diverse topics (labor market, housing market, consumer goods, production economics, sociology, international relations, psychology, public education, healthcare management, environmental policy). The book is accompanied by a dedicated website where 2TSF software code in the R and gretl open-source platforms is provided.

The two-tier stochastic frontier model was first invented in 1987.  Since then, the approach has been refined and applied to a number of areas spanning micro and macroeconomics, as well as other social science disciplines including health and political science. Alecos Papadopoulos and Christopher F. Parmeter’s Two-Tier Stochastic Frontier Analysis for the Social Sciences is a vital synthesis and extension of this literature. I can easily see their book becoming the definitive source on the power of the two-tier frontier. 

Solomon W. Polachek, Distinguished Professor of Economics, Binghamton University