Validation and Mortality Forecasting: Establishing Method Validation Prior to Forecasting
Ricarda Duerst
1
,
Christina Bohk-Ewald
2
1
Max Planck Institute for Demographic Research,
2
University of Helsinki
Accurate mortality forecasts are essential for decision makers to plan for changing needs of pension and other social security systems. Researchers have developed a variety of methods with increasing methodological complexity to forecast mortality developments. Our study's main goal is to establish validation as a test prior to mortality forecasting to confirm that a selected method is suitable. We develop a detailed and objective validation design to assess accuracy and bias of mortality forecasts. For our analysis, we apply our validation design to short-term Lee-Carter forecasts. We use age-specific mortality rates for 24 countries and all available calendar years from the Human Mortality Database. We quantify Lee-Carter's forecast performance with the percentage error for life expectancy and lifespan disparity at birth in three analytical settings. We show that validation serves as a meaningful test to decide whether a method is appropriate to forecast mortality in a country of interest.