Low base effect in business and
economics
Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and interac ...
is the tendency of a small absolute change from a low initial amount to be translated into a large percentage change.
[Parikh, Parag. (2009). ''Value Investing And Behavioral Finance''. New Delhi: Tata McGraw-Hill]
p. 120
.
In the following example, focusing solely on the 33.3% growth of Company B in year 5 may give a misleading indication of the company's relative performance versus Company A.
See also
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Base effect
The base effect is a mathematical effect that originates from the fact that a given percentage of a reference value, is not the same as the absolute difference of the same given percentage of a much larger or smaller reference value. E.g. 1% of a G ...
References
Economics effects
Socio-economic statistics
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