Mathematical operations with the Normal distribution [a re-blog from corp.ling.stats]

Following a recent Twitter exchange with Ian Dryden, I was thinking I’d write something about the risk of default for the USS pension scheme. But then I came across this other new post at corp.ling.stats — which has already done what I was intending!

corp.ling.stats

This post is a little off-topic, as the exercise I am about to illustrate is not one that most corpus linguists will have to engage in.

However, I think it is a good example of why a mathematical approach to statistics (instead of the usual rote-learning of tests) is extremely valuable.

Case study: The declared ‘deficit’ in the USS pension scheme

At the time of writing nearly two hundred thousand university staff in the UK are active members of a pension scheme called USS. This scheme draws in income from these members and pays out to pensioners. Every three years the pension is valued, which is not a simple process. The valuation consists of two aspects, both uncertain:

  • to value the liabilities of the pension fund, which means the obligations to current pensioners and future pensioners (current active members), and
  • to value the future asset value of the pension fund…

View original post 2,753 more words

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