The calendar year fallacy: The danger of reliance on calendar year data in end-of-life capacity and financial planning.

Abstract

Planners, actuaries, and others involved in forecasting capacity and costs must manipulate historical data. Data from calendar/financial year totals have been assumed to be adequate and reliable. This relies on the assumption that year-to-year differences do not arise from patterns concealed in the data. While the seasonal cycle is widely recognized, longer term patterns such as disease outbreaks will act to modify annual demand and costs. Monthly data relating to deaths in local government areas in England and Wales are used to demonstrate curious semipermanent bursts of high behavior. There is no seasonal pattern for the start of these events, and the sudden switch to high deaths can occur at any time, even in immediately adjacent areas. Higher deaths and related demand and costs endure for around 12 months before they suddenly revert to the former level where they stay until the next of these curious high events. In England and Wales (and many other countries), a period of unexplained higher deaths, reduced life expectancy, and health care and life insurance costs since 2011 appears to be coming to an end and looks to have arisen from a coincidence of these events at sub-national level.