The ideal method of making a mortality table, if it were possible, would be to take a large number of persons under observation from their birth and keep account of the diminution of their number each year by death. This is not practicable, however, for it would not be possible to keep them all under observation. But, if one has already ascertained, by observing a large number at each age, what the rate of mortality is at each age, he can, as has been said, construct a table which will show how the lives would fail, quite as well as if he had been able to keep a large number of persons under observation from their births.
The first trace of anything like a mortality table is dis covered at about the year 364, A. D., when Ulpian, a Roman praetorian prefect, introduced a table of probable life, in order to enable annuities upon lives to be valued. Upon what data it was based is unknown.
John Graunt, in a book published in 1662, gives a crude mortality table, proceeding by decades from birth, instead of single years, derived from the baptismal and mortality records of the city of London.
John de Witt, the famous Grand Pensioner of Holland and West Friesland, in a state paper bearing date about 1671, suggested a mortality table. This was in a discus sion of the sale of life annuities by the State as a means of raising money.
In a contribution to the Philosophical Society, in 1693, Edmund Halley published the first complete mortality table, deduced from the mortality records of the city of Breslau, Germany. This table was based on reports of deaths only, and it was assumed that the population was stationary, the births and deaths balancing.
In 1762 the Equitable Society for the Assurance of Lives and Survivorships was organized in London through the efforts of Thomas Simpson and James Dodson. Is was the first life insurance company to issue policies for the whole period of life at level or other fixed premiums, and for fixed sums payable at death. The computations were based on a mortality table, deduced from the vital statistics of London by Simpson and Dod son, and published in 1752.
In 1780 Dr. Richard Price, a Scotch clergyman, pub lished several mortality tables which he had constructed, including the famous Northampton Table, derived from the mortality records of two parishes in Northampton. This table, which, like the Breslau, was based upon returns of deaths only, was adopted by the Equitable as its stand ard, and also by the British government as a standard for annuities. Dr. Price also gave tables, deduced from the vital statistics collected by the Swedish government at the suggestion of the philosopher, Menander.
In 1815 Joshua Milne published a mortality table which he had constructed from the mortality statistics of the city of Carlisle, England. This was the first mortality table graduated so as to smooth out accidental variations from age to age; unlike the Northampton, it was con structed from census returns as well as records of deaths. It exhibited much lower mortality rates than the North ampton, and a great debate ensued as to the comparative merits of the tables. The Northampton table had shown much higher death rates at the younger ages than were experienced by the companies as to insured lives or by the government as to annuitants. For insurances, the error proved to be on the safe side, for the premiums had been higher than was necessary; but for life annuities, the error was on the wrong side, and in consequence they had been sold at prices quite too low.
The Carlisle table, since it accorded more nearly with the actual experience on insured lives, after a time super seded the Northampton table for computing premiums and values of insurances; but a table of mortality, con structed from the experience of the British government as to annuitants, by the government actuary, John Fin laison, and published in 1823, became the standard for life annuities.
In 1843 the first "combined experience" table, derived from insured lives, appeared. It was deduced from the experience of 17 British life insurance offices, male and female lives combined, and accordingly was called in England the "17 Offices Table." In that country it never became standard; but it was adopted by Elizur Wright, Insurance Commissioner of Massachusetts, as the stand ard table for the valuation of life policies in that State, and under the name "Actuaries' Table" or "Combined Experience Table" it became the leading and recognized standard in the United States.
In 1868 Sheppard Homans, then actuary of the Mutual Life Insurance Company of New York, published a table, which has since been known as the "American Experience Table," deduced from the experience of that company, adjusted by reference to the "17 Offices Table" and cer tain arbitrary assumptions. This table was adopted as the standard of the State of New York, and has also been of great reputation in this country. It is now the table most frequently used in life insurance computations and also the usual standard for valuation. It is what is known as an "ultimate" table, i. e., the data of the period during which mortality is most markedly affected by fresh medi cal selection were excluded in constructing the table.