David G. Tucek. 2011. A Comparison of Period and Cohort Life Tables. Journal of Legal

Economics 17(2): pp. 113-130.

Tucek: “A Comparison of Period and Cohort Life Tables” 113

Forensic economists have two types of life tables available to them: cohort life tables and period life tables. A cohort life table is based on the experience of a specific cohort of individuals, for example, all persons born in the year 1910. Based on age-specific death rates observed through consecutive calendar years, a pure cohort life table reflects the mortality experience of the actual cohort from birth until no living members of the group remain. Rather than being based on the experience of a cohort of individuals born in the same year, a period life table presents what would happen to a synthetic cohort through time if it experienced the age-specific death rates for a particular period throughout the life of the cohort. The life tables published by the National Center for Health Statistics (NCHS) are period life tables. (Arias, 2010). These are the life tables that are generally utilized in the development of work life expectancy.

A pure cohort table is not relevant to the issues faced by forensic economists since the mortality experience of individuals born over ninety years ago would not account for the many factors – for example, changes in smoking habits or medical care – affecting today’s 20-, 30- or even 60-year olds. However, each year the Social Security Administration (SSA), in conjunction with the presentation of its Annual Report of the Board of Trustees to Congress, prepares both period and cohort life tables that are specific to individual calendar and birth years. For past calendar years, the SSA period tables are based on the mortality experience for that year; projected mortality rates are used in the period tables for future calendar years. The SSA cohort tables are based on a combination of actual and projected mortality rates for each birth cohort, beginning with birth year 1900 and ending with birth year 2075. The SSA’s period and cohort life tables both extend through age 119. (Bell and Miller, 2005).

Given the availability of three sets of life tables (the NCHS period tables and the SSA period and cohort tables), it is natural to examine the differences among them and to ask whether these differences are material with respect to the estimation of economic damages. This paper examines these differences and seeks to answer this question by comparing loss estimates for 20-, 30-, 40-, 50- and 60-year old males and females. In each case, the results derived from the NCHS period tables published in Arias (2010) are taken as a baseline, with the differences resulting from use of the SSA period and cohort tables being reported.