Why considering life expectancy risk is like Love Island
August 27, 2019
“I’m writing a blog on projecting life expectancy for pension funds” I said to my friend the other day. “How do I make it more interesting?” I asked.
“Include references to Love Island'' she said. “People might read it then”.
Hmm, I’m not so sure. ‘Write with your audience in mind’, my marketing team are always telling me. I imagine the Venn diagram of those that enjoy analysing life expectancy risk and those that enjoy Love Island has a very small intersecting area – although I must confess I’m in it. But maybe this is an unfair stereotype (any other lovers of life expectancy risk modelling and Love island – please feel free to identify yourself in the comments!). So here goes…
For those that don’t know – Love Island is basically a TV show where a group of very good looking and very telegenic people get locked in a villa and attempt to find ‘love’. The show culminates in a final where the viewers vote for their favourite couple. At which point one of the favourite couple (picked at random) has to choose whether to split the £50k prize money with their partner or keep it all for themselves, thus proving whether they truly ‘love’ their partner – or would prefer the money.
This final gesture, though, on which the whole show culminates, is entirely irrelevant. The shows winners (and even runners up) will go on to make (it is rumoured) in excess of £1m on promotions, appearances and promoting products. So whether or not in the final sequence the chosen partner splits the £50k or not has no real meaning, as they will each make c£1m anyway!
This, my friends, is why (and I can tell you wondering where this was going), Love Island is very much like considering life expectancy risk.
Much like the headlines during the run of Love Island - there is a huge amount of excitement, analysis and press comment dedicated to what is happening with current mortality rates. With the recent publication of the CMI’s latest Quarterly Mortality Update, this I am sure will happen again – not least because in the first half of this year, life expectancy improvements were the joint highest that we have seen in the last 10 years (very much against the previous trend).
However, like the £50k ‘split or not’ decision at the end of Love Island, I contend what is happening with current mortality rates is (relatively) irrelevant. In the same way as the £50k is nothing more than a sideshow to the £1m the Love Island winners will make, current death rates is no more than a sideshow to what might happen with life expectancy trends in the future.
I am not saying that current death rates are not an important factor for those considering, modelling or managing life expectancy risk. Of course it is – and what is killing people today and the current trend in this will be an important component of any life expectancy model. But I worry we are overly obsessed with it. Current mortality trends are, and I admit I am simplifying a little, no more than a collection of a few immediate short term impacts, and a culmination of technologies, lifestyle and interventions of the mostly distant past. They say nothing about future drivers of life expectancy which may not have had any impact on current death rates yet.
I think, and I will be talking more about this at Longevity 15 in September, we need to have a much greater focus on what current or new technologies, regulation and lifestyle may do to life expectancy in the future. This for me is the ‘main event’ rather than the backward looking sideshow of current mortality stats.
I get that future new technologies that may impact on life expectancy are hard to measure. Like love on Love Island, it’s very hard to separate the ‘real’ from the ‘hype’, and of course we have already had some salutary lessons where much hyped new technology that will extend life has not lived up (excuse the pun) to the promise – or indeed in some cases the claims turned out to be fraudulent. But here too new technology has a role to play with the ability to sift through vast amounts of data and understand lifestyle changes in a way we couldn’t in the past – helping us identify the real future drivers.
The weak signals of what will happen with future life expectancy trends are there – we just need to be able to separate them out from the noise.
So, yes, the latest data in mortality and the impact on liabilities from each annual updated CMI model is important. But I think we should be, and indeed now can be, focusing much more on what could drive the future trend.
It’s easy to get hooked on Love Island (speaking from personal experience). It’s easy to focus on the daily fix of what is happening in the Love Island villa. But when the show finishes, no one really cares whether the couples stay together in the long term or not (and sadly most don’t).
This 'live in the moment' attitude is fine for Love Island. But not for life expectancy modelling. We have to care about what future new technologies may do to life expectancy (increase or reduce) as the impact of these could be huge and profound on companies, individuals, and the pensions and insurance sectors. As important as they are, we should not be too distracted by the ‘easy fix’ of current mortality rates.
At Longevity 15, I will set out my thesis for both how new technologies and regulation may impact life expectancy, but also how we can use technology to be more confident about modelling these emerging technologies.
Love is for the long term, not just for the short duration of Love Island.
Life expectancy modelling is the same.
For more information on how we help clients consider life expectancy risk and use technology to monitor ‘weak signals’, please contact Paul Kitson, Pensions and Savings Disruption Leader
