Demographic Projections: User and Producer Experiences of Adopting a Stochastic Approach

Statistics New Zealand is one of the few national statistical agencies to have applied a stochastic (probabilistic) approach to official demographic projections. This article discusses the experience and benefits of adopting this new approach, including the perspective of a key user of projections, the New Zealand Treasury. Our experience is that the change is less difficult to make than might be expected. Uncertainty in the different projection inputs (components) can be modelled simply or with more complexity, and progressively applied to different projection types. This means that not all the different demographic projections an agency produces need to adopt a stochastic approach simultaneously. At the same time, users of the projections are keen to better understand the relative certainty and uncertainty of projected outcomes, given the important uses of projections.