Clarifying Misunderstandings of Life Expectancy

A new public policy paper released by the American Academy of Actuaries cautions that clarification may be needed regarding data published by the Centers for Disease Control and Prevention on estimated life expectancy decreases measured in light of the COVID-19 pandemic.

The Academy’s new paper, “Clarifying Misunderstanding of Life Expectancy and COVID-19,” builds on a December issue brief developed by the Academy’s pension committee, titled “Interpreting Pandemic-Related Decreases in Life Expectancy.”

As defined in the paper, life expectancy, generally, is a measure of the expected future lifetime of an individual person. There are various measures of life expectancy used in different contexts, which can lead to confusion when decreases attributed to certain events are reported.

Additionally, the paper notes, there are two key life expectancy measures—period life expectancy and cohort life expectancy—which have some important differences. Period life expectancy generally assumes that current rates of death continue indefinitely. Cohort life expectancy is more heavily influenced by long-term expectations.

The CDC report, which is based on deaths during 2020, garnered widespread attention in suggesting that Americans had lost a year and a half of life expectancy due to the pandemic. A reduction of roughly three years in life expectancy was cited for Black and Hispanic Americans. This decrease in life expectancy follows several years of smaller life expectancy declines, which have run counter to the long-term trend of increases in longevity.

The Academy paper argues that there is the potential for confusion from the CDC life expectancy estimates because it used the period life expectancy measurement to estimate life expectancy changes in 2020, publishing in July a preliminary estimate of a 1.5-year year-over-year decrease. This figure was updated in December 2021 to show a final estimate of a 1.8-year decrease.

Measured at a given age, period life expectancy is the remaining number of years that a hypothetical individual can expect to live, on average, if rates of death prevailing during a given period continue indefinitely, the Academy reiterates. This often-cited measure of life expectancy varies dramatically from one year to the next.

The CDC’s methodology and the estimated decrease assume that the heightened mortality of the pandemic during 2020 will persist indefinitely, which the Academy says is an unlikely scenario. As such, using the “cohort life expectancy” measurement is better suited than period life expectancy, as it assumes that the pandemic’s mortality effects will lessen over time.

Generally, cohort life expectancy is better suited than period life expectancy to reflect the long-term effects of a typically nonrecurring event—such as a pandemic—allowing for an understanding of the actual number of years that a typical individual might be expected to live based on reasonable expectations of future conditions, the paper explains. Due to historical and expected future improvements in mortality rates, cohort life expectancy is consistently higher than period life expectancy.