Base effect
When a percentage change is large or small mainly because of the size of the starting value, not because of what happened. Tiny bases produce dramatic percentages from a handful of events.
In plain English
Going from 2 to 8 is +300%; going from 1,000 to 1,050 is +5%, but adds more. The same applies after a slump: recovering from a very low point produces big percentage gains that only undo earlier losses. Always ask for the starting number and the absolute change alongside the percentage.
Uncle Gary explains
The North-East region won Fastest-Growing Region for going from 2 customers to 8. The South grew 5% and gained 50.
Why it matters for your money
'Profits up 400%' at a small company can mean a few hundred thousand dollars. Growth from tiny bases is the most advertised and least informative.
Where we tested it
Related terms
All glossary terms. Educational content, not financial advice.