Human Mortality Modeling with a Fuzzy Approach Based on Singular Value Decomposition Technique

Abstract

Modeling and forecasting human mortality are significant research topics in several disciplines because mortality rates are fundamental in planning and policy decisions. Among various techniques, Lee Carter (LC) model is one of the most popular stochastic method in human mortality modeling. The original LC model was fuzzified to eliminate the assumptions related with homoscedasticity. The existing fuzzy model makes use of ordinary least squares (OLS) technique, which prevents the model to capture the existing fluctuations in data. In this study, a revised version of fuzzy LC model utilizing singular value decomposition (SVD) technique is proposed to overcome this issue. After modeling the mortality rates, their future values are forecasted by a modified first order fuzzy time series technique. For illustration purposes, proposed method is applied to mortality data of Finland. Numerical outputs show that proposed method is statistically better in modeling mortality compared to the existing fuzzy method. In addition, the modified fuzzy time series technique generates better forecasts than the original version.