BRACHISTOCHRONE: THE LIBRARY

Course: Demography/HSTS205
Worked Questions

Title: Fundamentals of Actuarial Mathematics

AUTHOR

Ivan Tadiwanashe Chuma

Revised: September 10, 2021

To everyone who appreciates my help.
 Contents

List of Figures iii

List of Tables iv

Acknowledgements v

Tutorial Questions 1

Suggested Solutions 4

IVAN TADIWANASHE CHUMA ii

 List of Figures

1. The Linear Interpolation Algorithm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

IVAN TADIWANASHE CHUMA iii

 List of Tables

1. Tabulated computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. Tabulated computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Table required to compute median by linear interpolation . . . . . . . . . . . . . . . . . . . . 10

IVAN TADIWANASHE CHUMA iv

 Acknowledgements

I would like to thank everyone who managed to hold on.

IVAN TADIWANASHE CHUMA v

 Tutorial Questions

On the next page.

IVAN TADIWANASHE CHUMA 1

 DEMOGRAPHY(HSTS 205)
TUTORIAL WORKSHEET 4 and 5/2020

1. Briefly explain what you understand by “Reproductivity”.

2. Briefly explain any two measures of Reproductivity.
3. Show that 𝑁𝑅𝑅 ≤ 𝐺𝑅𝑅.
4. Consider the data fgiven in the table below.

Age group Central age (𝑦) 𝑙𝑦 𝑓𝑦′

⁄𝑙
0
10-14 12.5 0.9810 0.0084
15-19 17.5 0.9791 0.0356
20-24 22.5 0.9713 0.1074
25-29 27.5 0.9662 0.0877
30-34 32.5 0.9641 0.0507
35-39 37.5 0.6584 0.0244
40-44 42.5 0.5475 0.0068
45-49 47.5 0.4120 0.0004

Using data in the table above, compute the following:

(i) Net reproductive rate
(ii) Gross reproductive rate
(iii) Mean length of a generation
(iv) Intrinsic rate of increase, using Coale’s approximation.

5. For a stable population, the mean length of a generation is 27 years and the NRR=2.5. Use Coale’s
approximation to determine the rate of increase.
6. Using the datain the table below,

Age group Central age (x) 𝑓𝑥′ (daughters) 𝑙𝑥

⁄𝑙
0
10-14 12.5 0.0125 0.9851
15-19 17.5 0.0789 0.9766
20-24 22.5 0.1582 0.9545
25-29 27.5 0.1280 0.9389
30-34 32.5 0.1009 0.9262
35-39 37.5 0.0914 0.9177
40-44 42.5 0.0651 0.9033
45-49 47.5 0.0085 0.8772

Calculate the
(a) mean age at child bearing,
(b) gross reproductive rate,
(c) net reproductive rate,
(d) total fertility rate, assuming that the sex-ratio is 98 males to 100 females,
(e) general fertility rate, , assuming that the sex-ratio is 98 males to 100 females,
(f) mean length of a generation, and
(g) Intrinsic rate of increase, using Coale’s approximation.
7. Describe briefly what happens to a population in each of the following cases.
(a) 𝑁𝑅𝑅 = 1
(b) 𝑁𝑅𝑅 = 0.5
(c) 𝑁𝑅𝑅 = 1.5

8. Suppose that the probability of having k sons follows the distribution:

𝑝0 = 0.5318 and 𝑝𝑘 = (0.2473)(0.4718)𝑘−1
Determine the probability of extinction of a male line of descent?

9. Let {𝑍𝑡 , 𝑡 = 0, 1, 2, ⋯ } be a Galton-Watson process and 𝑝𝑘 be the probability of having exactly 𝑘

1
sons. Suppose that the probability generating function of { 𝑝𝑘 } is 𝑔(𝑠) = (1 + 2𝑠 + 3𝑠 2 ). A point
6
𝑠 is called a fixed point of 𝑔(𝑠) if 𝑔(𝑠) = 𝑠.
(a) Show that 𝑔(𝑠) has exactly two fixed points.
(b) Hence or otherwise, find the probability of extinction on the male line given that 𝑍0 = 1.

END OF TUTORIAL
 Suggested Solutions

1. Reproduction is the extent to which a population replaces itself.

2. N RR
• Is a robust measure of reproductivity
• It takes into account the survival rates of females
• Gives an indication of replacement
• Always lower than GRR since it takes into account the fact that some women will die before
entering and completing their child bearing years
TFR
• Is a standardized measure of fertility
• Useful for comparing fertility levels of 2 populations
• It provides the average completed family size
• Useless without age specific fertility rates
• Does not take into account children given birth to by a woman above child bearing age
GRR
• GRR, like T F R assumes that the hypothetical cohort of women pass from births through their
reproductive life without experiencing mortality
• Satisfactory when one wants to compare fertility levels across populations and over time.
• Helps aggregate age specific fertility rates into one simple measure: mean number of daughters
expected per one women.

IVAN TADIWANASHE CHUMA 4

 Demography Worked Questions

BF ℓFx
3. Let be the proportion of female births from the total births and be the female survival rate to
BT ℓF0
LF
the central age x and n Fx be the n-year cumulative female survival rate of age group with the central
ℓ0
T
age x. Also let n fx be the age specific fertility rate for the total births of the n-year age group x per
female. The age specific fertility rate for daughters is then given by

F BF
n fx = × n fxT
BT
Then
BF
≤1
BT
and
ℓFx
≤1
ℓF0
With the above 2 inequalities, we have

BF ℓFx BF
× ≤ ≤1
BT ℓF0 BT

and multiplying the above inequality throughout by n × n fxT yields

BF T ℓFx BF
× n × f
n x × ≤ × n × n fxT ≤ n × n fxT
BT ℓF0 BT

which implies

BF
X ℓF BF
X X
×n× T
n fx · xF ≤ T × n × T
n fx ≤n× T
n fx (1)
BT ℓ0 B
∀x ∀x ∀x

Note that
ℓFx n Lx
F
n× =
ℓF0 ℓF0
and also
BF
× n fxT = n fxF
BT
Hence the inequality (1) can be simplified to
X F
X X
F n Lx F T
n fx · ≤n× n fx ≤n× n fx
ℓF0
∀x ∀x ∀x

that is
N RR ≤ GRR ≤ T F R

IVAN TADIWANASHE CHUMA 5

 Demography Worked Questions

4. See Table 1 below for the computations:

Table 1. Tabulated computations

Age group Central age (y) ly /l0 fy′ fy′ ∗ ly /l0 y ∗ fy′ ∗ ly /l0
9.514.5 12.5 0.981 0.0084 0.0082404 0.103005
14.519.5 17.5 0.9791 0.0356 0.03485596 0.6099793
19.524.5 22.5 0.9713 0.1074 0.10431762 2.34714645
24.529.5 27.5 0.9662 0.0877 0.08473574 2.33023285
29.534.5 32.5 0.9641 0.0507 0.04887987 1.588595775
34.539.5 37.5 0.6584 0.0244 0.01606496 0.602436
39.544.5 42.5 0.5475 0.0068 0.003723 0.1582275
44.549.5 47.5 0.412 0.0004 0.0001648 0.007828

Total — — 0.3214 0.30098235 7.747450875

(a) By assuming that fy′ is for daughters only,

X ℓFy
F
N RR = 5 5 fy ·
ℓF0
∀x
= 5 × .30098235
= 1.50491175

(b) By assuming that fy′ is for daughters only,

X
F
GRR = 5 5 fy
∀y

= 5 × .3214
= 1.607

(c) By assuming that fy′ is for daughters only,

X ℓFy
5 F · ·y
5 fy
ℓF0
∀x
M LG =
N RR
5 × 7.747450875
=
1.50491175
= 25.74054882 years

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 Demography Worked Questions

(d) The intrinsic rate of increase using Coale’s approximation is given by

ln N RR
r=
M LG − .7 ln N RR
ln 1.50491175
=
25.74054882 − .7 ln 1.50491175
= .01605748708
≈ 1.6057%

5. Using Coale’s approximation

ln N RR
r=
M LG − .7 ln N RR
ln 2.5
=
27 − .7 ln 2.5
= .03476250081
≈ 3.4763%

6. See Table 2 below for the computations:

Table 2. Tabulated computations

Age group Central age (x) lx /l0 fx′ fx′ ∗ lx /l0 x ∗ fx′ ∗ lx /l0 x ∗ fx′
9.514.5 12.5 0.9851 0.0125 0.01231375 0.153921875 0.15625
14.519.5 17.5 0.9766 0.0789 0.07705374 1.34844045 1.38075
19.524.5 22.5 0.9545 0.1582 0.1510019 3.39754275 3.5595
24.529.5 27.5 0.9389 0.128 0.1201792 3.304928 3.52
29.534.5 32.5 0.9262 0.1009 0.09345358 3.03724135 3.27925
34.539.5 37.5 0.9177 0.0914 0.08387778 3.14541675 3.4275
39.544.5 42.5 0.9033 0.0651 0.05880483 2.499205275 2.76675
44.549.5 47.5 0.8772 0.0085 0.0074562 0.3541695 0.40375

Total  7.4795 0.6435 0.60414098 17.24086595 18.49375

(a) The mean age at child bearing x is given by

X
x × 5 fxF
∀x
x= X
F
5 fx
∀x
18.49375
=
.6435
= 28.73931624 years

IVAN TADIWANASHE CHUMA 7

 Demography Worked Questions

(b) The gross reproductive rate is given by

X
F
GRR = 5 5 fx
∀x
= 5 × .6435
= 3.2175

(c) The net reproductive rate is given by

X ℓFx
F
N RR = 5 5 fx ·
ℓF0
∀x
= 5 × .60414098
= 3.0207049

(d) The total fertility rate, assuming that the sex-ratio is 98 males to 100 females is given by

BT
TFR = × GRR
BF
198
= × 3.2175
100
= 6.37065

(e) To compute the general fertility rate (GF R), we have to first take a closer look at the following
derivation.
Number of births to females aged 10–49
GF R =
Total number of females aged 10–49
X ℓF
X F
n Lx
n× F
n fx · Fx F
n fx ·
ℓ0 ℓF0
∀x ∀x
= F
or F
F · ℓx n Lx
X f
n x
X F
n fx ·
ℓF0 ℓF0
n× T T
n fx n fx

∀x ∀x

BF
X ℓFx BF
X F
T T n Lx
×n× n fx · × n fx ·
BT ℓF0 BT ℓF0
∀x ∀x
= F
or F
T · ℓx n Lx
X f
n x
X T
n fx ·
BF ℓF0 BF ℓF0
×n× ×
BT T
n fx BT T
n fx

∀x ∀x
N RR N RR
= Xℓ or X
BF F
x BF n Lx
F
×n× ×
BT ℓF0 BT ℓF0
∀x ∀x

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 Demography Worked Questions

The general fertility rate, assuming that the sex-ratio is 98 males to 100 females is computed
using equation (4) as follows

N RR
GF R = Xℓ
BF F
x
×n×
BT ℓF0
∀x
3.0207049
= 100
198 × 5 × 7.4795
= .1599303617 per one female

(f) The mean length of generation is given by

X ℓFx
F
5 5 fx · ·x
ℓF0
∀x
M LG =
N RR
5 × 17.24086595
=
3.0207049
= 28.53781902 years

(g) The intrinsic rate of increase using Coale’s approximation is given by

ln N RR
r=
M LG − .7 ln N RR
ln 3.0207049
=
28.53781902 − .7 ln 3.0207049
= .03981743177
≈ 3.9817%

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 Demography Worked Questions

(h) Calculate the median age at child bearing. [Bonus question]

Let the median age at child bearing be denoted x
e50 . We have to adjust the age groups to make
them continuous as shown in Table 3 below:
Table 3. Table required to compute median by linear interpolation

Age group Central age (x) Frequency Cumulative frequency

9.514.5 12.5 0.0125 0.0125
14.519.5 17.5 0.0789 0.0914
19.524.5 22.5 0.1582 0.2496
24.529.5 27.5 0.128 0.3776
29.534.5 32.5 0.1009 0.4785
34.539.5 37.5 0.0914 0.5699
39.544.5 42.5 0.0651 0.635
44.549.5 47.5 0.0085 0.6435

Total  0.6435 

x50 ] = .5 × .6435 = .32175.

Using Table 3, the depth of the median, d[e
Hence x
e50 is in the 24.529.5 age group. Hence using Figure 1 below, we have

Figure 1. The Linear Interpolation Algorithm

.2496 .32175 .3776

24.5 𝑥෤50 29.5

e50 − 24.5
x .32175 − .2496
=
29.5 − 24.5 .3776 − .2496  
.32175 − .2496
⇒x
e50 = 24.5 + (29.5 − 24.5)
.3776 − .2496
13 987
=
512
≈ 27.31835938 years

(i) Calculate the variance of age at child bearing. [Bonus question]

Note that the variance of age at child bearing is given by
X
(x − x)2 n fxF
∀x
s2 = F
n fx

Hence using the above formula, the variance of age at childbearing is 67.41125921 years.

IVAN TADIWANASHE CHUMA 10

 Demography Worked Questions

7. (a) N RR = 1 — population is constant, 1 daughter is replacing 1 mother. At this time GRR > 1
and T F R > 2.
(b) N RR = .5 — population is decreasing, few daughters born than mothers. The intrinsic rate of
increase is negative and 500 females are being lost per 1 000 women.
(c) N RR = 1.5 — population is increasing, more daughters replacing mothers. The intrinsic rate
of increase is positive and 500 more females are being gained per 1 000 women.
8. The probability generating function is given by
∞
X
g(s) = pk sk
k=0
∞
X
= .5318 + (.2473)(.4718)k−1 sk
k=1
 ∞
X
.2473
= .5318 + (.4718)k sk
.4718
k=1
 ∞
X
.2473
= .5318 + (.4718s)k
.4718
k=1
  
.2473 .4718s
= .5318 +
.4718 1 − .4718s
 
.2473s
∴ g(s) = .5318 +
1 − .4718s
Let us have a look at the following theorems.
Theorem 1. If the mean number of sons according to a male E[Z1 |Z0 = 1] ≤ 1 then the probability of
extinction of the family surname is 1.
Theorem 2. If the mean number of sons according to a male E[Z1 |Z0 = 1] > 1 then the probability of
extinction of the family surname is the unique non-negative solution of the equation g(s) = s with 0 ≤ s ≤ 1.
Using the above 2 theorems, one of the fixed points is 1. Now since E[Z1 |Z0 = 1] > 1, we deduce the
following:
• The fixed point g(1) = 1 is ignored since the probability of extinction of the family surname is
not 1 according to Theorem 1.
• The probability of extinction of the family surname is the unique non-negative solution of the
equation g(s) = s other than g(1) = 1 and all s > 1 according to Theorem 2 and the above note.
Hence
s = g(s)
 
.2473s
= .5318 +
1 − .4718s
Solving the above equation yields

s ≈ .999946 or 1.12723

∴ probability of extinction is approximately .999946

IVAN TADIWANASHE CHUMA 11

 Demography Worked Questions

9. (a) We want to show that there are 2 distinct values of s that satisfy g(s) = s. Thus

s = g(s)
1
= (1 + 2s + 3s2 )
6
1 2 2 1
⇒ s − s+ =0
2 3 6

Solving the above quadratic equation yields

1
s = 1 or
3

Now

1
g(1) = (1 + 2(1) + 3(1)2 ) = 1 hence s = 1 is a fixed point
6

Also
  "    2 #
1 1 1 1 1 1
g = 1+2 +3 = hence s = is a fixed point
3 6 3 3 3 3

Hence g(s) has exactly 2 fixed points.

(b) Using the probability generating function g(s), E[Z1 |Z0 = 1] > 1. Thus using Theorem 1 and
Theorem 2 and part (a), the probability of extinction on the male line given that Z0 = 1 is 13 .

IVAN TADIWANASHE CHUMA 12