Category: General actuarial

BAYESIAN AND FREQUENTIST RESULTS ARE NOT THE SAME, EVER

Mary Pat Campbell
Bayesian and frequentist results are not the same, ever

Excerpt:

You can’t compare results from Bayesian and frequentist methods because the results are different kinds of things. Results from frequentist methods are generally a point estimate, a confidence interval, and/or a p-value.

…..

In contrast, the result from Bayesian methods is a posterior distribution, which is a different kind of thing from a point estimate, an interval, or a probability. It doesn’t make any sense to say that a distribution is “the same as” or “close to” a point estimate because there is no meaningful way to compute a distance between those things. It makes as much sense as comparing 1 second and 1 meter.

Author(s): Allen Downey

Publication Date: 25 April 2021

Publication Site: Probably Overthinking It

Covid, false positives and conditional probabilities…

Mary Pat Campbell

Link: https://www.theguardian.com/theobserver/commentisfree/2021/apr/25/covid-false-positives-and-conditional-probabilities

Excerpt:

In courtrooms, mixing up the probability of “A given B’” with “B given A” is known as the “prosecutor’s fallacy”. In 1999, a court convicted Sally Clark of the murder of her two sons, in part because a medical expert claimed the chance of two accidental cot deaths was one in 73m. Even if this number was right – which it isn’t – it did not reflect the chance she was innocent. A double murder was also very rare: the relative likelihood of the two explanations was key and with new evidence and better statistical reasoning, an appeal court quashed the conviction.

There was controversy after a recent Observer headline referred to Bayes’s theorem as “obscure”. His ideas may be little known by the public, but they are growing among scientists. Many complex analyses done during the pandemic have been “Bayesian”, including modelling lockdown effects, the ONS infection survey, and Pfizer-BioNTech’s vaccine trial. The term “credible interval”, rather than “confidence interval”, is the giveaway.

Last week, Cass Business School announced the renaming of its institution after Bayes and his theorem. The obscure tomb in nearby Bunhill Fields is worth a visit.

Author(s): David Spiegelhalter, Anthony Masters

Publication Date: 25 April 2021

Publication Site: The Guardian

Keep Up With the Standards: On ASOP 56, Modeling

Mary Pat Campbell

Link: https://www.soa.org/sections/modeling/modeling-newsletter/2021/april/mp-2021-04-campbell/

Excerpt:


If nothing else, having a checklist to go through while working on modeling can help you make sure you don’t miss anything. Hey, ASB, make some handy-dandy sticky note checklists we can stick on our monitors to ask us:

3.1 Does our model meet the intended purpose?

3.2 Do we understand the model, especially any weaknesses and limitations?

3.3 Are we relying on data or other information supplied by others?

3.4 Are we relying on models developed by others?

3.5 Are we relying on experts in the development of the model?

3.6 Have we evaluated and mitigated model risk?

3.7 Have we appropriately documented the model?

Author(s): Mary Pat Campbell

Publication Date: April 2021

Publication Site: The Modeling Platform at the Society of Actuaries

Ahead of the curve: Modelling the unmodellable

Mary Pat Campbell

Link: https://www.ipe.com/home/ahead-of-the-curve-modelling-the-unmodellable/10051869.article

Graphic:

Excerpt:

In his youth, the economist Kenneth Arrow analysed weather forecasts for the US Army. When he found that the predictions were as reliable as historical averages, he suggested reallocating manpower. The response from the army general’s office? “The general is well aware that your division’s forecasts are worthless. However, they are required for planning purposes.”

Even before COVID-19, many shared that scepticism of forecasts. The failure to foresee the 2008-09 financial crisis started a debate on economic modelling. Over the past year, the performance of epidemiological models has not resolved this quandary.

Investors have long known that “all models are wrong, but some are useful,” to use the statistician George Box’s pithy idiom. But, there are modellers who use this defence to preserve models beyond usefulness. Meanwhile, there are unrealistic expectations from consumers of models including investors, policymakers and society. They assume that complex issues are easy to forecast, when some things are just unknowable. This gap begs the question of what investors should do.

Author(s): Sahil Mahtani

Publication Date: April 2021

Publication Site: Investments & Pensions Europe

Embrace the Grind

Mary Pat Campbell

Link: https://jacobian.org/2021/apr/7/embrace-the-grind/

Excerpt:

For example, I once joined a team maintaining a system that was drowning in bugs. There were something like two thousand open bug reports. Nothing was tagged, categorized, or prioritized. The team couldn’t agree on which issues to tackle. They were stuck essentially pulling bugs at random, but it was never clear if that issue was important.. New bug reports couldn’t be triaged effectively because finding duplicates was nearly impossible. So the open ticket count continued to climb. The team had been stalled for months. I was tasked with solving the problem: get the team unstuck, get reverse the trend in the open ticket count, come up with a way to eventually drive it down to zero.

So I used the same trick as the magician, which is no trick at all: I did the work. I printed out all the issues – one page of paper for each issue. I read each page. I took over a huge room and started making piles on the floor. I wrote tags on sticky notes and stuck them to piles. I shuffled pages from one stack to another. I wrote ticket numbers on whiteboards in long columns; I imagined I was Ben Affleck in The Accountant. I spent almost three weeks in that room, and emerged with every bug report reviewed, tagged, categorized, and prioritized.

Author(s): Jacob Kaplan-Moss

Publication Date: 7 April 2021

Publication Site: Jacob Kaplan-Moss

Actuaries Find Race and Ethnicity Disclosure Gap

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2021/04/06/actuaries-find-race-and-ethnicity-disclosure-gap/

Excerpt:

About 12% of U.S. residents are Black, and 15% are Hispanic or Latino.

In the insurance industry, 12% of employees are Black and 12% are Hispanic or Latino.

Just 4.4% of new SOA members are Black, and 3.7% of new members are Hispanic or Latino.

Author(s): Allison Bell

Publication Date: 6 April 2021

Publication Site: Think Advisor

Spring 2021 Meeting: Actuarial Club of Hartford and Springfield

Mary Pat Campbell

Link: https://actuariesclubofboston.com/Spring-2021-Meeting/

Preliminary Agenda:

Current Schedule:

Week 1
Monday, May 10: (General) Actuarial Transformation: Trends & Insights across Data, Processes, Models, and People

Tuesday, May 11: (Life) Consolidated Appropriations Act, 2021: Changes to IRS code Section 7702
Wednesday, May 12: (General/Professionalism) Emerging Professionalism Issues in 2021
Thursday, May 13: (Investments) Macro Economic & Market Update

Thursday, May 13, 4pm EDT: (General) Networking Session
Friday, May 14: (Health) The Role of Behavioral Health‐Now and in the Future

Week 2
Monday, May 17, 9am EDT: (General) Actuaries Working in International Landscape 
Tuesday, May 18: (Health) Health Technology, Consumerism and the Explosion of Telehealth 
Wednesday, May 19: (Pension) New Pension Relief under ARPA: Its Implications for Pension Plans
Thursday, May 20: (Life/Annuities) Mortality Differential by Socioeconomic Categories in the US 
Friday, May 21: (Life/Annuities) Life Reinsurance 101 Panel Discussion 

Date accessed: 6 April 2021

Publication Site: Actuaries Club of Boston

Rational Ignorance and the Protection Gap: Is There a Cure?

Mary Pat Campbell

Link: https://www.soa.org/sections/reinsurance/reinsurance-newsletter/2021/march/rsn-2021-03-poon-affat/

Excerpt:

The phrase “coverage gap,” heard often from life insurance company executives, is defined as  “the shortfall in the amount of life insurance cover necessary to maintain the current living standards of dependents.” Life insurance companies devote extraordinary amounts of time, effort, and expense trying to educate underinsured individuals about the need to protect themselves and their families from this gap by buying more cover. Could our industry not be addressing one of the key issues leading to the lack of consumer enthusiasm for our products?

Here’s the issue: insurance products and contracts are not consumer-friendly. To the average person, life and living benefits products are at least as byzantine as Brazil’s political system, and the language of insurance contracts could almost be considered an actual dialect. Insurance is thus fertile ground for the manifestation of rational ignorance among potential customers, who are already known to be more likely to pay attention to information about it if it comes from friends and social media posts. (I pity the buyer researching concepts and options such as pure protection, accumulation, critical illness, disability income, or long-term care.)

Author(s): Ronald Poon-Affat

Publication Date: March 2021

Publication Site: Reinsurance News at the Society of Actuaries

Actuarial Standards Board 2020 Annual Report

Mary Pat Campbell

Link: http://www.actuarialstandardsboard.org/wp-content/uploads/2021/03/asb2020Annual.pdf

Excerpt:

The Pension Committee, chaired by David Kausch, continued work on ASOP No. 27,
Selection of Economic Assumptions for Measuring Pension Obligations, and ASOP No. 35,
Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension
Obligations. The ASB adopted both revisions in June.


The Pension Committee also continued its work on ASOP No. 4, Measuring Pension
Obligations and Determining Pension Plan Costs or Contributions.

Date Accessed: 27 March 2021

Publication Site: Actuarial Standards Board

Actuarial Board for Counseling and Discipline: 2020 Annual Report

Mary Pat Campbell

Link: http://www.abcdboard.org/wp-content/uploads/2021/03/ABCD-Annual-2020.pdf

Excerpt:

There were 47 inquiries in process with the ABCD during 2020, based on either complaints or adverse information.
Twenty-four of these were disposed of during 2020.

….

The ABCD members responded to 127 requests for guidance during 2020.

Publication Date: February 2021

Publication Site: Actuarial Board for Counseling and Discipline

14th Actuarial Speculative Fiction Submissions

Mary Pat Campbell

Link: https://www.soa.org/sections/2020-speculative-fiction-contest/

Excerpt:

The 14th Speculative Fiction Contest is over, and we now get to find out which story is the readers’ favorite!

Read each of the stories submitted by our creative and imaginative actuaries. Pick up to three of your favorite stories and vote for no more than three, so that we have a true Readers’ Choice Award. We will award the author of the story getting the most votes a specially designed Speculative Fiction Zoom background and an SOA branded gift. Be sure to tell your friends about this contest. Get them to read the stories and pick their favorites too!

Voting online must occur from March 8 – April 15. On May 1 this award, as well as all the other awards will be announced on the SOA website.

Publication Date: March 2021

Publication Site: Society of Actuaries

Ethics and use of Data Sources for Underwriting ft. Neil Raden and Kevin Pledge -NSNA(Ep.4)

Mary Pat Campbell

Video:

Description:

The video features Neil Raden who is the author of ethical use of AI for Actuaries. Alongside him , it features Kevin Pledge who is CEO of Acceptiv , FSA,FIA and chair of Innovation and Research Committee of SOA. We discuss about the issue of ethics and about the use of new data sources in the recent Emerging issues in Underwriting Survey Report by IfOA.

Authors: Harsh Jaitak, Kevin Pledge, Neil Raden

Publication Date: 17 March 2021

Publication Site: TBD Actuarial at YouTube