Can population projections be used for sensitivity tests on policy models?

New Zealand Treasury Working Paper 03/07

Published June 2003

Author: John Bryant

Abstract

Many policy models require assumptions about future population trends. Sensitivity tests for these assumptions are normally carried out by comparing population projection variants. This paper outlines some of the conditions that variant-based sensitivity tests must meet if they are to be informative. It then describes four common situations where these conditions are not met, so that conventional sensitivity tests are not informative. The solution, the paper argues, is stochastic population projections.

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Abstract Table of Contents List of Tables List of Figures 1 Introduction 2 A framework for assessing demographic sensitivity tests on policy models 3 Fertility, mortality, and migration assumptions exclude random shocks 4 ‘Low-low’ or ‘high-high’ variants are not calculated 5 Variants’ rankings differ with the outcome considered 6 Fertility only changes early in the projection period 7 A solution: Stochastic population projections 8 References	twp03-07.pdf (159 KB) pp. 1–12
List of Tables Table 1 – Coverage of possible scenarios and the implications for sensitivity testing Table 2 – Interpretation of results from a sensitivity test Table 3 – Statistics New Zealand projections variants for total population and dependency ratios in 2021 List of Figures Figure 1 – Demographic sensitivity tests for policy models Figure 2 – Estimates and 1999-base projection assumptions for net permanent and long term migration into New Zealand Figure 3 – Simulation of the effects of a fertility decline Figure 4 – Statistics New Zealand fertility assumptions and projected values for percentage of population aged 15-64, 1999(base)-2101 projections

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Abstract

List of Tables

List of Figures

1 Introduction

2 A framework for assessing demographic sensitivity tests on policy models

3 Fertility, mortality, and migration assumptions exclude random shocks

4 ‘Low-low’ or ‘high-high’ variants are not calculated

5 Variants’ rankings differ with the outcome considered

6 Fertility only changes early in the projection period

7 A solution: Stochastic population projections

8 References

twp03-07.pdf (159 KB) pp. 1–12

List of Tables

List of Figures

Acknowledgements

John Creedy, Dharma Dharmalingam, John Janssen, and Veronica Jacobsen provided helpful comments on earlier versions of this paper.

Disclaimer

The views expressed in this Working Paper are those of the author and do not necessarily reflect the views of the New Zealand Treasury. The paper is presented not as policy, but with a view to inform and stimulate wider debate.

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Publication Details

Can population projections be used for sensitivity tests on policy models?

Abstract

Contents

Abstract

Table of Contents

List of Tables

List of Figures

1 Introduction

2 A framework for assessing demographic sensitivity tests on policy models

3 Fertility, mortality, and migration assumptions exclude random shocks

4 ‘Low-low’ or ‘high-high’ variants are not calculated

5 Variants’ rankings differ with the outcome considered

6 Fertility only changes early in the projection period

7 A solution: Stochastic population projections

8 References

List of Tables

List of Figures

Acknowledgements

Disclaimer