Page 232 - Probability Demystified

CHAPTER 12 Actuarial Science 221

causes of death as well as could be determined at that time. At best, they were
‘‘hit and miss’’ accounts. If a clerk did not publish the information one week,
the figures were included in the next week’s summary. Also during this time,
people began keeping records of deaths due to the various plagues.
Around 1662, an English merchant, John Graunt (1620–1674), began
reviewing the Bills of Mortality and combining them into tables. He used
records from the years 1604 to 1661 and produced tables that he published in
a book entitled National and Political Observations. He noticed that with the
exception of plagues or wars, the number of people that died at a certain age
was fairly consistent. He then produced a crude mortality table from this
information. After reviewing the data, he drew several conclusions. Some
were accurate and some were not.
He stated that the number of male births was slightly greater than the
number of female births. He also noticed that, in general, women lived longer
than men. He stated that physicians treated about twice as many female
patients as male patients, and that they were better able to cure the female
patients. From this fact, he concluded that either men were more prone to die
from their vices or that men didn’t go to the doctor as often as women when
they were ill!
For his work in this area, he was given a fellowship in the Royal Society
of London. He was the first merchant to receive this honor. Until this time,
all members were doctors, noblemen, and lawyers.
Two brothers from Holland, Ludwig and Christiaan Huygens (1629–1695)
noticed his work. They expanded on Gaunt’s work and constructed their own
mortality table. This was the first table that used probability theory and
included the probabilities of a person dying at a certain age in his or her life
and also the probability of surviving to a certain age.
Later, insurance companies began producing and using mortality tables to
determine life expectancies and rates for life insurance.