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The Ageing of the New Zealand Population, 1881-2051 - WP 03/27

6  Population projections and uncertainty

Demographic trends are much easier to predict than most social and economic trends. Aided by the fact that all the relevant people have now been born, demographers can, for instance, say something sensible about the number of 60 year olds who are likely to be living in New Zealand in 2061. Few other economic or social forecasts about the year 2061 contain much substance. Moreover, for many purposes, it is legitimate to ignore the demographic uncertainty that is present. If all that is required is an order of magnitude, or if demographic influences are not the focus of attention, then a single demographic projection is often enough.

In some cases, however, it is helpful to test the extent to which the results of a policy model are sensitive to demographic uncertainty. Economic forecasters, for instance, might want to take the possibility of adverse demographic trends into account. Statistical agencies, including Statistics New Zealand, respond to this need by publishing a set of alternative projections, based on different combinations of fertility, mortality, and migration assumptions, as shown in Table 2. By comparing results from different series, users can obtain some feeling for the magnitude and influence of demographic uncertainty, as was done in Section 3.3 for migration.

Table 2 – Projection variants published by Statistics New Zealand
Series Fertility assumption Mortality assumption Migration assumption
1 Low Medium 5,000
2 Medium High 5,000
3 Medium Medium 0
4 Medium Medium 5,000
5 Medium Medium 10,000
6 Medium Medium 20,000
7 Medium Low 5,000
8 High Medium 5,000

The standard projection variants approach is simple, inexpensive, and transparent. It does, nevertheless, have some problems. For reasons explained in Bryant (2003a), sets of population projection variants tend to understate the extent to which uncertainty about fertility rates creates uncertainty about future age structure. Demonstrations that “demography makes little difference” to projected fiscal or economic outcomes therefore needed to be treated sceptically.

Probabilistic population projections, which yield probability distributions for future demographic outcomes, can be used to overcome these limitations. Wilson and Bell (2003) are in the process of constructing probabilistic projections for Australia and New Zealand. Preliminary results suggest, for instance, that there is a 95% probability that the median age of the New Zealand population will fall between 40 years and 51 years in 2051 (it is currently 26 years) (Wilson 2003: Figure 13).

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