Evaluating Alternative Implementations of the Hamilton-Perry Model for Small Area Population Forecasts: the Case of Australia

Small area population forecasts are widely used across the public and private sectors, with many users requiring forecasts broken down by sex and age group. The preparation of small area age-sex population forecasts across a whole country or State with a multiregional cohort-component model is usually a time-consuming and expensive task. It involves the purchase of large datasets, considerable amounts of complex data preparation and assumption-setting, and substantial amounts of staff time. A quicker and lower-cost alternative is to use a reduced form cohort projection model, such as the Hamilton-Perry model. This paper presents an evaluation of various implementations of the Hamilton-Perry model, including an alternative version employing a combination of Cohort Change Ratios and Cohort Change Differences. It also evaluates the effects on forecast accuracy of smoothing the age profiles of Cohort Change Ratios and Differences, and constraining to independent population forecasts. Population ‘forecasts’ were created for small areas of Australia over the horizon 2006–16 and compared against population estimates. The most accurate implementation is found to be the Hamilton-Perry model using a combination of Cohort Change Ratios and Cohort Change Differences, smoothed age profiles, and with constraining to independent forecasts.