Calibrating Gompertz in reverse: What is your longevity-risk-adjusted global age?

This paper develops a computational framework for inverting Gompertz–Makeham mortality hazard rates, consistent with compensation laws of mortality for heterogeneous populations, to define a longevity-risk-adjusted global (L-RaG) age. To illustrate its salience and possible applications, the paper c...

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Autores:
Tipo de recurso:
Article of journal
Fecha de publicación:
2020
Institución:
Universidad de Bogotá Jorge Tadeo Lozano
Repositorio:
Expeditio: repositorio UTadeo
Idioma:
eng
OAI Identifier:
oai:expeditiorepositorio.utadeo.edu.co:20.500.12010/13158
Acceso en línea:
https://www.sciencedirect.com/science/article/pii/S0167668720300445?via%3Dihub
http://hdl.handle.net/20.500.12010/13158
https://doi.org/10.1016/j.insmatheco.2020.03.009
Palabra clave:
Pensions
Insurance
Retirement
Longevity risk
Biological age
Síndrome respiratorio agudo grave
COVID-19
SARS-CoV-2
Coronavirus
Rights
License
Acceso restringido
Description
Summary:This paper develops a computational framework for inverting Gompertz–Makeham mortality hazard rates, consistent with compensation laws of mortality for heterogeneous populations, to define a longevity-risk-adjusted global (L-RaG) age. To illustrate its salience and possible applications, the paper calibrates and presents L-RaG values using country data from the Human Mortality Database (HMD). Among other things, the author demonstrates that when properly benchmarked, the longevity-risk-adjusted global age of a 55-year-old Swedish male is 48, whereas a 55-year-old Russian male is closer in age to 67. The paper also discusses the connection between the proposed L-RaG age and the related concept of Biological age, from the medical and gerontology literature. Practically speaking, in a world of growing mortality heterogeneity, the L-RaG age could be used for pension and retirement policy. In the language of behavioral finance and economics, a salient metric that adjusts chronological age for longevity risk might help capture the public’s attention, educate them about lifetime uncertainty and induce many of them to take action — such as working longer and/or retiring later.