How to Use This Tool
Enter two rates. You get the point difference, the relative change, and the wording that correctly goes with each.
The two quantities
- Percentage points — the plain subtraction. 6% minus 4% is 2 percentage points. This is an absolute difference and it does not depend on where you started.
- Percent change — the difference expressed as a share of the starting value. 2 divided by 4 is 50%. This is relative, and it depends entirely on the starting value.
Both describe the same movement. Saying "unemployment rose 2%" when it went from 4% to 6% is wrong, because that phrasing means the relative change, which was 50%. The correct short form is "rose 2 percentage points", often abbreviated to "2pp".
Why this gets exploited
The relative figure is enormous when the base is small and modest when the base is large. That asymmetry is a gift to anyone with a case to make, and neither party has to say anything false:
- A risk going from 0.1% to 0.2% is up 100% — and it is one extra case in a thousand.
- A support rating going from 48% to 50% is up 4% — which sounds like nothing, and is the same 2-point move that would be "up 50%" from a base of 4%.
So the useful habit when reading a percentage claim is to ask which of the two it is, and what the starting value was. A relative change quoted without its base is not enough information to judge anything, which is precisely why it is often quoted that way.
Basis points, and why finance uses them
A basis point is one hundredth of a percentage point, so 2 percentage points is 200 basis points. Finance adopted the term for exactly the reason this page exists: interest rates are themselves percentages, so "the rate rose 2%" is hopelessly ambiguous — from 4% to 4.08%, or from 4% to 6%? Saying "200 basis points" cannot be misread. It is a vocabulary fix for an ambiguity that costs money.
A note on direction
Relative change is not symmetric, which surprises people. Going from 4% to 6% is a rise of 50%, but going back from 6% to 4% is a fall of 33%, not 50% — because the base changed. Percentage points are symmetric: 2 up and 2 down. If you need a measure that reads the same in both directions, points are the one to use.
