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Concerning Hardy's Method of Performing a Makeham Graduation

Published online by Cambridge University Press:  11 August 2014

G. C. Taylor  and
P. A. Worcester
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Abstract

Some years ago G. F. Hardy proposed a method of performing a mortality graduation in accordance with Makeham's formula. This method is now well known to actuaries of the British tradition, having been absorbed into textbooks some time ago. A less known method of performing such a graduation was suggested by Cramér and Wold in 1935. The two methods differ in their approach to the non-linear Makeham constant c. This paper briefly considers the choice between the two methods from a theoretical viewpoint. Theoretically, the choice seems to be fairly clearly in favour of the method of Cramér and Wold. This does, however, involve extra computation. For this reason, and because Hardy's method has become entrenched in British tradition, its efficiency has been tested by simulation. The results of this simulation are reported in the paper and throw serious doubt on whether, despite its computational saving, Hardy's method should be used.

Type
Research Article
Information
Journal of the Staple Inn Actuarial Society , Volume 22 , June 1978 , pp. 217 - 224
Copyright
Copyright © Institute of Actuaries Students' Society 1978

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References

REFERENCES

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