Information consists of the differences that make a difference.
I have recently been computing a lot of percentage differences – mainly in variance calculations. I have been using the formula that I was taught in 7th grade, namely
- N is an updated or new number.
- O is the original number.
- Δ% is the percentage change.
I recently discovered that this formula fails miserably when dealing with negative quantities – I had never considered what happens when the O variable is negative.
Consider the case when O = -4 and N = -2. This should reflect a positive improvement of 50%, but instead the sign is negative.
Looks like I have been computing percent differences incorrectly since 7th grade. Here is how I am going to compute percent differences going forward.
I did a bit of googling and some folks prefer to the use the sign instead of the absolute value function in their percent difference formula (example).