Monday, October 20, 2014

Survival probability calculator

It’s calculator time again!  When I posted the last one, someone referred to it as depressing.  I hadn’t seen in that way, though I believe this was someone who pays New Jersey property taxes, so I guess any reminder of how much that costs would be a downer.

Anyway, probably everyone will agree that this one is depressing.  In fact, whereas I linked to the other one at the top, middle and bottom of the accompanying post, I’m going to save this one for the end of the post so people can decide whether or not to even use it.

So with that inspiring introduction, I present… a multi-person survival probability calculator!

The immediate idea came from a post at the Hull Financial Planning blog (I don’t follow it, though I’ve followed links to it several times and it seems good) about evaluating your need for life insurance.  Sensibly enough, that calculation requires knowing approximately what your chances of actually filing a claim are.  But also, I’ve long had a bookmark to the SSA’s Actuarial Life Tables and occasionally spent some time studying what they have to say.

What the calculator does is simple: given any number of people, with age and sex, and a number of years, it uses the SSA table to calculate each person’s cumulative probability of surviving for that long, plus the combined probability of everyone in the group making it.

What to do with this information?  

Here are some possibilities:

Ignore it

Don’t even run the calculator.  Sufficient unto the day is the evil thereof, right?  Let’s just go with the working hypothesis that we and our loved ones are immortal.

Figure out why it doesn’t apply to you

Plenty of fertile ground here.  For one thing, are you in better shape than the average of your peers?  And some of the people who die every year start the year knowing they have a potentially fatal condition.  So if that doesn’t apply to you, that must help the odds at least a bit.  Actually, you can do a little better than mere speculation on this one.  I recently came across a pair of web sites that ask you a bunch of questions then predict your personal life expectancy.  They’re called Living to 100 and Blue Zones.  (Note: unfortunately, both require an email address. But I think it might work to use a fake one.)

And then there’s another sobering statistic: for some age groups, suicide is the second leading cause of death.  That seems like one where you can have at least some idea of how big a risk factor it is for you personally.

Examine your priorities

The question, as I see it, is “If the moment comes when I discover that I’m going to get the bad side of this equation, what will I think about my choices?  Is there anything I could be doing to make that hypothetical future self feel better about my life, without messing things up for the other future self who’s living in the much more likely hypothetical world where everything turns out OK?”

Freak out

Plenty of directions to take this--extreme risk-aversion, frantically piling up experiences, depression, …  I’m sure there are others, and you could also bounce between them all.

Acceptance [1]

Maybe your priorities are in decent shape and you’re willing and able to take this in and see it as just one of the many uncertainties of life (“Anything can happen”).

I think I’ve done some of all of these.  Even the first one, since I spent a few days thinking “Yeah, I probably don’t need to do that” between thinking of the idea and figuring out my own number.  I haven’t freaked out much, but there have certainly been moments of internal panic.  I wasn’t expecting a double-digit number for my 20-year downside risk.

And finally... the calculator! [2]

[1] I realized partway through thinking about and writing down these responses that they map fairly well to the “stages of grief”, if you put anger and depression together under “freak out” and group “examine your priorities” in with acceptance (which makes sense, as a different form of acceptance, i.e. “This is real and it applies to me. What am I going to do about it?”).

[2] Note re data/privacy: this calculator operates entirely in your browser and doesn’t transmit anything.  I kind of wish I had made it at least tell me when it’s been clicked, because I’m curious how many people will actually run it, but I didn’t.