Dec 30, 2014

Human Development Index 1980 - 2013

Now that the year 2014 is coming to an end, let's take a look at the Human Development Index (HDI) over the years 1980 - 2014.

DEFINITION OF 'HUMAN DEVELOPMENT INDEX
The HDI is a tool developed by the United Nations to measure and rank countries' levels of social and economic development.

The HDI is based on four criteria:

  1. Life expectancy at birth 
  2. Mean years of schooling 
  3. Expected years of schooling 
  4. Gross national income per capita. 


The HDI makes it possible to track changes in development levels over time and to compare development levels in different countries.

How does your country rank on HDI?

Wish you all a nice Sylvester evening tomorrow!

Dec 21, 2014

Actuarial Readability

As an actuary, accountant or financial consultant, deep knowledge, expert skills and experience are key to writing an interesting article or paper advice.

However, no matter how much you're an expert, finally you're as good as you can get your message across to your audience.

The art of the expert is to simplify the complexity of his/her research into simple, and for the audience understandable text.

In practice this implies that the expert will have to measure the readability of his papers before publishing.

The two most important issues to tackle are 'readability' and 'text-level'.

Although there are many sorts of tests, both topics are simply covered by the so called  Flesch-Kincaid Readability Test.

Let's take a look ate the two simple test formulas of this test:



Flesch-Kincaid Readability Test



Flesch Reading Ease Score

FRES = 206.835 – (1.015 x ASL) – (84.6 x ASW)



Flesch-Kincaid Grade Level

FKGL = (0.39 x ASL) + (11.8 x ASW) – 15.59


With:
ASL  = average sentence length
number of words divided by the number of sentences

ASW = average number of syllables per word

number of syllables divided by number of words


Texts with a FRES-score of 90-100 are easily understandable by an average 5th grader and scores between 0 and 30 are best understood by college graduates.

Some examples of readability index scores of magazines:
- Reader's Digest Magazine: FRES = 65
- Time magazine: FRES = 52
- Harvard Law Review: FRES = 30

The FRES-test has become a U.S. governmental standard. Many government agencies require documents or forms to meet specific readability levels. Most states require insurance forms to score 40-50 on the test.


Where to test your documents?

Besides matching the FRES and FKTL scores in your document, as a guideline try to establish the next English text-test-characteristics
  • Average sentence length 15-20 words, 25-33 syllables and 75-100 characters.
  • Characters per word: < 7
  • Syllables per word: 1.5 - 2.0
  • Words per sentence: 15 - 20

This blog text resulted in scores:
- Flesch-Kincaid Reading Ease 64.7
- Flesch-Kincaid Grade Level 7.2
- Characters per Word 4.4
- Syllables per Word 1.5
- Words per Sentence 11.8


Example
As an example we test the readability of one of the articles of the Investment Fallacies e-book, as published by the Society of Actuaries (SOA) :

By Max J. Rudolph, published in 2014

The readability outcome is as follows:


Readability Score 'The Best Model Doesn’t Win'

Reading Ease
A higher score indicates easier readability; scores usually range between 0 and 100.

Readability Formula
Score
48.1

Grade Levels

A grade level (based on the USA education system) is equivalent to the number of years of education a person has had. Scores over 22 should generally be taken to mean graduate level text.

Readability Formula
Grade
10.3
12.9
14.2
9.5
__________________________
10.2
____
Average Grade Level
11.4

Text Statistics
Character Count 7,611
Syllable Count 2,531
Word Count 1,495
Sentence Count 98
Characters per Word 5.1
Syllables per Word 1.7
Words per Sentence 15.3


Actuarial Texts
With regard to public financial or actuarial publications a FRES-score of around 50 assures, that your publication reaches a wide audience. Even in case you're publishing an article at university level, try to keep the FRES-score as high as possible.

If you write an academic paper, you may use the online application Word and Phrase to measure the percentage of academic words. Try to keep this percentage below 20% to keep your document readable. The publication 'The Best Model Doesn’t Win' would score 17% on academic words......


Finally
Next time you write a document or make a PPT presentation, don't forget to




Links:
WORD AND PHRASE

Nov 9, 2014

Retirement Age Development

Due to the continuous ageing process and a strong ongoing growth of life expectancy, countries need to increase their formal retirement age.

Actuarial calculations show  in general that - in order to keep pensions affordable - the formal pension age for future generations will eventually have to increase to the age of 71 or even 75 years.

However, lifting up the retirement age is not an easy process, as people have grown up with the concept of a steady retirement date, all their life. As if 'work is slavery' and life only really starts at your pension date, when you abruptly stop working and live a life behind the window of your apartment...

However THE pension date doesn't exist, it's an illusion, a fata morgana...



Not only that retirement increases the age-related decline of health and cognitive abilities for most workers, it also increases your mortality rate, as a RP-2000 Mortality Study shows:


Secondly, nobody - not even an actuary - can predict the outcome of a pension plan over a period of 60-70 years. Pension dates and and long term pension outcomes are by definition unsure.

OECD Retirement Ages
What we can do is keeping the retirement age in pace with the development of our life expectation. This is exactly what some OECD countries have done, as the next chart shows:


Of  course, the optimal retirement planning depends on several economic en demographic developments in a country.


On the OECD page you can play and compare several pension-related variables across different countries.

Enjoy playing and learning from these OECD data.

Links
- Unhealthy Retirement (2014)
- Does working longer increase your lifespan? (2010)
- OECD Page