APPENDIX A Projection Model AG2016 Technical description 1. Terms and definitions The projection table shows per sex for the ages and years the best estimate for the one-year mortality probabilities . This is the probability that someone who is alive on 1 January of year t and who was born on 1 January of year will be deceased on 1 January of year . The model also allows the user to draw up a projection for the years after 2066. The mortality probabilities are not modelled immediately; instead we specify the corresponding force of mortality (or 'hazard rate') . We assume that for all 1. As a result of this Each dynamic model that is described in terms of the force of mortality can therefore be described in terms of one-year mortality probabilities using the above formula. 2. Dynamic model For ages up to and including 90 years, with , the Li-Lee1 model is used for both sexes : with a trend factor for each sex, age and years defined by the time series where is the force of mortality for the population of the Netherlands (with sex ), force of mortality for a peer group of West-European countries and the the quotient of the two (i.e. the deviation for the Netherlands relative to the peer group). This means that a random walk with drift model is assumed for the time series of the peer group and a first-order autoregressive model, without a constant term, for the time series of the deviation for the Netherlands. The stochastic variables are independent and identically distributed (i.i.d.) and have a four-dimensional normal distribution with a mean (0,0,0,0) and a given 4x4 covariance matrix . 1 Li, N. and Lee, R. (2005) Coherent Mortality Forecasts for a Group of Populations: An Extension of the Lee-Carter Method. Demography 42(3), pp. 575-594. Projection Table AG2016 Appendix A 32
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