Why Markov Process Worklife Expectancy Tables are Usually Superior to the LPE Method

Based on surveys of members of the National Association of Forensic Economics (NAFE), the predominant method for calculating worklife expectancy involves the use of Markov process statistical worklife expectancy tables, with the LPE method as a distant second, use of a fixed retirement date as a close third, and with median or mean years to final labor force separation a distant fourth. However, no paper has specifically addressed the reasons why the majority of forensic economists (or at least a majority of those completing NAFE surveys) apparently feel that statistical worklife tables compiled by standard Markov process models are superior to calculations based on the LPE version of Markov process models. A statement arguing that the LPE method is superior to standard statistical worklife expectancy tables has been published by Michael Brookshire and George Barrett (2009). This paper evaluates the claims made by Brookshire and Barrett, and explains why standard versions of Markov Process tables will usually be more accurate than the LPE version of the Markov process model when used in developing estimates of work-life expectancy for specific individuals.