Random Scenario Forecasts Versus Stochastic Forecasts
Probabilistic population forecasts are useful because they describe uncertainty in a quantitatively useful way. One approach (that we call LT) uses historical data to estimate stochastic models (e.g., a time series model) of vital rates, and then makes forecasts. Another (we call it RS) began as a kind of randomized scenario: we consider its simplest variant, in which expert opinion is used to make probability distributions for terminal vital rates, and smooth trajectories are followed over time. We use analysis and C:Eudoraattachdemo_3_25_04.pdfexamples to show several key differences between these methods: serial correlations in the forecast are much smaller in LT; the variance in LT models of vital rates (especially fertility) is much higher than in RS models that are based on official expert scenarios; trajectories in LT are much more irregular than in RS; probability intervals in LT tend to widen faster over forecast time. Newer versions of RS have been developed that reduce or eliminate some of these differences.
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- UM01-03: Stochastic Modeling of the Dynamics of OASDI: Evaluation of Policy Alternatives and Behavioral Responses
Paper IDWP 2004-073