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Evaluating the performance of the Lee-Carter method for forecasting mortality.

R Lee1, T Miller

  • 1Demography and Economics, University of California, 2232 Piedmont Ave., Berkeley, CA 94720, USA. rlee@demog.berkeley.edu

Demography
|November 29, 2001
PubMed
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The Lee-Carter (LC) method for mortality forecasting shows good accuracy, with 97% of projections falling within expected ranges. However, its accuracy varies with time horizon and changing mortality patterns.

Area of Science:

  • Demography
  • Actuarial Science
  • Biostatistics

Background:

  • The Lee-Carter (LC) model, a prominent statistical method for mortality forecasting introduced in 1992, is evaluated for its predictive accuracy.
  • This study assesses both historical and simulated forecast errors of the LC method, comparing them against errors from Social Security Administration projections.

Discussion:

  • The LC method generally underprojected mortality improvements, but to a lesser extent than Social Security projections.
  • While ex ante 95% probability intervals contained the true life expectancy (e0) 97% of the time overall, these intervals exhibited biases: too wide for shorter horizons (up to 40 years) and too narrow for longer horizons (after 50 years).

Key Insights:

  • Projections made post-1945 for the period up to 1998 consistently showed forecast errors under two years.

Related Experiment Videos

  • Hypothetical applications of the LC method to mortality data from France, Sweden, Japan, and Canada indicated strong performance in these countries.
  • Outlook:

    • The effectiveness of the LC method may be challenged by evolving age-specific patterns in mortality decline throughout the 20th century.
    • Further research could explore model adjustments to better accommodate dynamic shifts in mortality trends across different age groups and populations.