Applications of Mortality Tables and Life Tables?

Question

Recently, I showed my friend what Life Tables and Mortality Tables are (e.g. https://en.wikipedia.org/wiki/Life_table) - I tried to explain possible uses for these kinds of tables but my friend argued and didn't think they were that important. I tried to explain to explain that they are useful in the Actuarial world for studying the rate at which people die and can in turn be used to set the prices for insurance premiums ... but my friend just replied : "So what, old people die - how does making a graph that shows the life expectancy really help anyone with anything useful beyond a infographic?".

I tried to think about how to explain the importance and applications of Life Tables and Mortality Tables - the only thing that came to mind is that these are closely related to the Kaplan-Meier Estimates (e.g. there is something called the "Life Table Estimate"), and thus Life Tables and Mortality Tables can be used to compare Survival Probabilities and Hazard Rates between different groups of people.

But other than that - I am unfortunately unable to come up with a good and convincing answer to the question "So what, old people die?".

Can someone please help me come up with an explanation as to why Life Tables and Mortality Tables are useful and what kind of applications they have?

Answer 1

So what, old people die - how does making a graph that shows the life expectancy really help anyone with anything useful beyond a infographic?

From the perspective of this old person, it's not just that I'll die. At my age I know that viscerally, not just intellectually.

What matters to me--and to the insurance systems like Social Security that will provide much of my financial support in the years that remain--is how likely I am to die, how soon. That requires quantitative analysis of the information provided in life tables.

Say that I have savings of \$100,000 at retirement. If I know that I'm going to die in the next year and don't need to leave any bequests thereafter, I can spend all \$100,000 during the year.

If, however, I have a reasonable chance of living another 25 years then I should only be taking about \$4000 per year from savings (depending on further quantitative assumptions about inflation, rates of returns on savings, etc.). That's a big difference from \$100,000. It's hard to live on \$4000 per year in the USA.

Insurance systems have the advantage of being able to average the quantitative risks over large numbers of individuals. Insurance systems that spread risk among individuals were some of the first advances of civilization. As the Encyclopaedia Brittanica puts it:

Insurance in some form is as old as historical society.

The Wikipedia entry on History of Insurance shows how insurance has been central to commerce for millennia. Application of the principles to individual life insurance took much longer: "it was only in the 1750s that the necessary mathematical and statistical tools were in place for the development of modern life insurance."

That's what life tables and the methods of analyzing them have made possible.

Answer 2

Lifetables generally give you information about

• How the population of a country (or any group of countries) develops over time
• How the age structure develops over time (think births, deaths and living people per age)

With that information one can not only track past changes, but also forecast future developments. This has implications for

• Pension systems: if a society ages, and the working population becomes smaller relative to the retired population, one needs to find a solution on how to finance the pension system
• Healthcare system: if a society ages, significantly more resources have to be spend on healthcare for old people
• General economic concerns: how do we ensure that enough resoruces (i.e. food, housing etc.) are produced for the population. What implications does that have for the environment?

To go into more detail about the age structure: if peoples life expectancy would increase, but with bad health in old age (like the Stuldbrugg in Gulliver's Travels) a country would have to implement a different healthcare policy than when people lived healthily up to older ages. Without information from (among others of course) life tables, finding out which scenarios are likely for the future would not be possible.

So if the healthcare, pension and general economic policies (or private providers) which apply are of any relevance to your friend, you might point out that they are based on information which stems from life tables.

By constructing lifetables which include causes of death (e.g. different diseases) and survival models, one can estimate the effect different diseases have on mortality and decide which treamtents to provide or research in order to save the most lives. If there was to be a pandemic, lifetables are of use to determine the consequences of the disease and the risks for different age groups.

Or maybe one might think that this penomenon is interesting: and wonder what caused it. What we observed is that some countries in the world have undergone a demographic transition and some are still in the process of transitioning. Most countries that have undergone this transition are rich countries and have birth rates below replacement, meaning that without migration they reduce in population. Demographers and economists use lifetables to study this phenomenon.