Question on Fisher/Lange

[jigglypuff]

Can anyone explain the alternative algebraic presentation of the report year methodology that is presented by Fisher/Lange towards the end of their article as well as its significance?

I feel like I am getting hung up in the notation here.

Also, how relevant do you think that this algebraic approach is and how likely is it to show up on the exam?

[Sox34]

i'm going to bump this up because I'm having problem with that alternative method as well...

It's my second time reading the article and I'm still getting hung up on it.

thanks.

[jorgensquelch]

I haven't seen any past exam questions on it. I am using the limited space in my brain to remember other topics on the syllabus.

[SouthOfSanity]

I am assuming you were having problems deciphering the definition of calendar year average claim cost, U_bar_c, on page 206. I am pretty sure all it means is that the calendar year average claim cost is the sum of the diagonals of Table 3 (page 194). Each diagonal represents a different calendar year.

If there is a question on the alternative method, I am quite sure they will provide us with the the y_hats (or q) and r_hats because they can't possibly expect us to solve for the r_hats and y_hats that minimize the sum of squares of the error term in the exam, can they? With the values of q and r_hats given, it's just a plug and chug to get the projected severity.

Hope this helps.