Forecasting small area populations with long short-term memory networks

Local and state governments depend on small area population forecasts to make important decisions concerning the development of local infrastructure and services. Despite their importance, current methods often produce highly inaccurate forecasts. Recent years have witnessed promising developments in time series forecasting using Machine Learning across a wide range of social and economic variables. However, limited work has been undertaken to investigate the potential application of Machine Learning methods in demography, particularly for small area population forecasting. In this paper we describe the development of two Long-Short Term Memory network architectures for small area populations. We employ the Keras Tuner to select layer unit numbers, vary the window width of input data, and apply a double training and validation regime which supports work with short time series and prioritises later sequence values for forecasts. These methods are transferable and can be applied to other data sets. Retrospective small area population forecasts for Australia were created for the periods 2006–16 and 2011–16. Model performance was evaluated against actual data and two benchmark methods (LIN/EXP and CSP-VSG). We also evaluated the impact of constraining small area population forecasts to an independent national forecast. Forecast accuracy was influenced by jump-off year, constraining, area size, and remoteness. The LIN/EXP model was the best performing method for the 2011-based forecasts whilst deep learning methods performed best for the 2006-based forecasts, including significant improvements in the accuracy of 10 year forecasts. However, benchmark methods were consistently more accurate for more remote areas and for those with populations <5000.