In this article
“The loan rate rose by 3 percent.” Did your EMI go up 3 percent, or did the rate go from 5 to 8? Those are not the same story, and the word that separates them is two words long: percentage points.
Same move, two numbers
- 8 − 5 = 3
- Tells you the size of the move on the scale
- (8 − 5) ÷ 5 = 0.6
- Tells you how big the move is compared with where it started
Neither is wrong. They answer different questions.
The table to keep in your head
| From | To | Change in points | Change in percent |
|---|---|---|---|
| 2% | 3% | +1 point | +50% |
| 5% | 8% | +3 points | +60% |
| 6.5% | 6.0% | −0.5 points | −7.7% |
| 18% | 28% | +10 points | +55.6% |
| 40% | 50% | +10 points | +25% |
| 90% | 99% | +9 points | +10% |
Same unit, two different sizes. Compare the 18 to 28 row with the 40 to 50 row: both +10 points, very different in percent.
Each step is exactly 10 points. The lower the starting point, the bigger the percentage.
Why headlines use the bigger number
“Risk doubles” sounds more dramatic than “risk goes from 1 in 1,000 to 2 in 1,000”. Both describe the same thing. The first is a 100 percent relative rise. The second is 0.1 points. If you want to know whether it matters to you, look for the starting number.
Same fact, three sizes. Only the last two tell you how much it matters to one person.
A quick test for any statistic
- Is it a share or a rate? If the quantity is already a percentage (interest, tax, vote share), “percent” can mean two things.
- Find the starting number. Without it, a percent change tells you almost nothing.
- Say it both ways. “Up 3 points, which is 60 percent more” is a full sentence.
- Check which direction. Down 50 percent then up 50 percent does not return you to the start. See up 50, down 50.
Questions people ask
What is the difference between percent and percentage points?
A percentage point is the simple difference between two percentages: 5% to 8% is 3 points. A percent change compares that difference to the starting value: 3 divided by 5 is 60 percent.
If interest rates rise from 5% to 6%, how much did they rise?
By 1 percentage point, which is a 20 percent relative increase.
Why do the media use percent instead of points?
Relative percentages often sound larger. Always check the starting value to see the real size of the change.
Can a percentage point change be negative?
Yes. A fall from 6.5% to 6.0% is −0.5 percentage points, or about −7.7 percent.
How do I calculate percent change?
Subtract the old value from the new one, divide by the old value, and multiply by 100.