Via Paul Krugman, I read the most polite putdown from an actuary I’ve seen for a while.
In an op-ed in the NY Times, Gary King and Somar Soneji alleged that Social Security projections understate life expectancy and are therefore far too optimistic:
We reached these conclusions, and presented them in an article in the journal Demography, after finding that the government’s methods for forecasting Americans’ longevity were outdated and omitted crucial health and demographic factors.
… the Office of the Chief Actuary, the branch of the Social Security Administration that is responsible for the forecasts, is almost exclusively composed of, well, actuaries — without any serious representation of statisticians or social science methodologists. While these actuaries are highly responsible and careful and do excellent work curating and describing the data that go into the forecasts, their job is not to make statistical predictions. Yet the agency badly needs such expertise.
The Office of the Chief Actuary, in this very considered response, pointed out that their work is intensively reviewed, both by the Board of Trustees, and an external reviewer, and, more pertinently, the critique seriously misunderstands their projections:
The comparison provided in Panel 4 is highly misleading and inaccurate. For example:
- The left panel of mortality projections bears no resemblance to the mortality projections the actuaries developed for the 2012 or prior Trustees Reports.
- The label for the data values is “chance of death in one year.” However, the values presented are probabilities of death in five years.
- Values shown for historical years of “better forecasts” do not agree with actual historical data.
Their conclusion?
As with all new entrants into this field of analysis, their work may ultimately provide value in the continuing evolution of our methods. However, the assertions in their op-ed require some response and clarification.
…
Both the Technical Panel results and those by King and Soneji are within the range of reasonable uncertainty as specified in the Trustees Report, and
therefore should cause no alarm. The Office of the Chief Actuary considers the work of demographers and other social scientists in our continual evolution of projection methods. We look forward to future contributions by King and Soneji.
A bonus for me, at least, is that I didn’t realise that this level of detail was available in the US in mortality projections. I’m always interested in mortality projections, and actuaries’ views of the impact of public health issues, like obesity and smoking.