Ever wondered why we bother with percentage change? Why can’t we just say something went up by 10, or down by 50? Well, it’s all about putting numbers into perspective.
Imagine your piggy bank had 10 dollars, and you added 5. That’s a 5-dollar increase, right? But what if a huge corporation worth a million dollars also had an increase of 5 dollars? The absolute change is the same, but does it feel the same? Not at all!
Percentage change helps us understand the relative impact. It takes that raw change, divides it by the original amount, and then multiplies by 100 to give you a percentage. It tells you how big the change is compared to what you started with .
This is super useful! For your piggy bank, adding 5 dollars is a 50% increase, which is massive! For the corporation, a 5-dollar increase is practically nothing. We use it to track salary raises, understand economic growth, see how much a company’s stock grew, or even track population shifts.
So, next time you hear about a 10% increase or a 20% decrease, you’ll know it’s not just about the raw numbers; it’s about seeing the change in its true proportion, making comparisons meaningful and understandable!