The presence of outliers in the data has implications for stochastic frontier analysis, and indeed any performance analysis methodology, because they may lead to imprecise parameter estimates and, crucially, lead to an exaggerated spread of efficiency predictions. In this paper we replace the normal distribution for the noise term in the standard stochastic frontier model with a Student’s t distribution, which generalises the normal distribution by adding a shape parameter governing the degree of kurtosis. This has the advantages of introducing flexibility in the heaviness of the tails, which can be determined by the data, as well as containing the normal distribution as a limiting case, and we outline how to test against the standard model. Monte Carlo simulation results for the maximum simulated likelihood estimator confirm that the model recovers appropriate frontier and distributional parameter estimates under various values of the true shape parameter. The simulation results also indicate the influence of a phenomenon we term ‘wrong kurtosis’ in the case of small samples, which is analogous to the issue of ‘wrong skewness’ previously identified in the literature. We apply a Student’s t-half normal cost frontier to data for highways authorities in England, and this formulation is found to be preferred by statistical testing to the comparator normal-half normal cost frontier model. The model yields a significantly narrower range of efficiency predictions, which are non-monotonic at the tails of the residual distribution.

High passenger and freight transport costs are a barrier to economic growth and social mobility, particularly in Low Income Countries (LICs). This paper considers the current state of knowledge regarding the barriers to achieving lower generalised transport costs. It considers both the road and railway modes across passenger and freight transport. These issues include a reform on the regulations for driver hours (preventing the road infrastructure from overloading), structuring rail concessions, increasing competition, and tackling corruption. Such reforms aim to deliver efficiency gains and service quality improvements at lower costs for users. This paper identifies the knowledge gap in previous research and concludes by setting out a research agenda that builds the evidence base for how the best practices from around the world can best be applied to the specific circumstances in Low Income Countries, with a particular focus on Sub-Saharan Africa and South Asia.