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Using Percentages in Statistics

Using Percentages in Statistics

Author: Ryan Backman
Description:

Calculate the percentage points and percent change.

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Tutorial

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Hi. This tutorial covers using percentages in statistics. So it's important to understand appropriate uses and to identify and misuses of percentages in statistics. So let's take a look at two new percents. Consider the following unemployment percents for the US. So in January 2010, the unemployment rate was 10.6% and in May of 2012 7.7%.

So a lot of the times, what we'll do is try to figure out, well, what sort of change? We want to quantify this change. And really, the two ways to do it is either by calculating an absolute change or a relative change. So let's go ahead and do that for both.

So if we look at absolute change, remember that absolute change is your new value minus your old value. So our new value here is 7.7%. And our old value is 10.6%. So if we subtract those two quantities, 7.7 minus 10.6, we end up with negative 2.9. So this absolute change is negative 2.9. And our units on there is percent.

Now, if we go to relative change, relative change, remember, is your absolute change divided by the old value. So really, what this is then is our absolute change divided by our old value. So from the absolute change over here, we know that the numerator of the ratio is negative 2.9%. And that's divided by 10.6%.

So now, if we go to the calculator and divide those two numbers, negative 2.9 divided by 10.6 ends up giving me negative 0.27. If we round to the nearest thousandth, that be negative 2.74. And generally, relative change is written as a percent. So that would be negative 27.4%. So employment went down by 27.4%.

So both of these two values, absolute change and relative change, are both percentages. But generally, what we call the absolute change is that the unemployment rate dropped by 2.9 percentage points. And it dropped by 27.4%. So absolute change is generally represented as a percentage point change, whereas relative change is a percent change.

So to recap that, absolute change is a percentage point change. Relative change is a percent change. So the key, key, key distinction here-- absolute is a percentage point change. Relative change is a percentage change.

So it's important that when an article or a news report quotes a percent change, you understand whether it's an absolute change or a relative change. So that's been the tutorial on using percentages in statistics. So thanks for watching.

Terms to Know
Percent Change

A relative increase or decrease in a percent value

Percentage Points

An absolute increase or decrease in a percent value.