Forecasting the mortality rates of Malaysian population using Heligman-Pollard model

Abstract

Actuaries, demographers and other professionals have always been aware of the critical importance of mortality forecasting due to declining trend of mortality and continuous increases in life expectancy. Heligman-Pollard model was introduced in 1980 and has been widely used by researchers in modelling and forecasting future mortality. This paper aims to estimate an eight-parameter model based on Heligman and Pollard’s law of mortality. Since the model involves nonlinear equations that are explicitly difficult to solve, the Matrix Laboratory Version 7.0 (MATLAB 7.0) software will be used in order to estimate the parameters. Statistical Package for the Social Sciences (SPSS) will be applied to forecast all the parameters according to Autoregressive Integrated Moving Average (ARIMA). The empirical data sets of Malaysian population for period of 1981 to 2015 for both genders will be considered, which the period of 1981 to 2010 will be used as “training set” and the period of 2011 to 2015 as “testing set”. In order to investigate the accuracy of the estimation, the forecast results will be compared against actual data of mortality rates. The result shows that Heligman-Pollard model fit well for male population at all ages while the model seems to underestimate the mortality rates for female population at the older ages.