THE DIFFERENCE BETWEEN RELATIVE AND ABSOLUTE…

YOU HAVE A PENNY AND SOMEONE GIVES YOU ANOTHER PENNY. YOU HAVE NOW INCREASED YOUR CASH BY 100% (i.e. doubled your money). WOW! THIS IS AN EXAMPLE OF A RELATIVE INCREASE.

HOWEVER, WHEN YOU COUNT YOUR PENNIES YOU ARE STILL POOR. YOU ONLY HAVE TWO CENTS (i.e., ABSOLUTE INCREASE IN CASH), WITH WHICH YOU CAN PAY FOR THINGS.

YOU PAY YOUR RENT, EXPENSES AND LOANS WITH ABSOLUTE INCREASES IN YOUR WAGES OR SALARY, NOT RELATIVE (ie percent) INCREASES.

WATCH THE NEWS AND NOTICE THAT IT IS OFTEN UNCLEAR WHAT IS MEANT BY AN INCREASE OR DECREASE IN A NUMBER OR PERCENT.

MANY TIMES, A SIGNIFICANT SOUNDING INCREASE OR DECREASE IN A NUMBER DOES NOT ACTUALLY MAKE A SIGNIFICANT DIFFERENCE IN OUR LIVES ( e.g. one penny vs two pennies).

Charles Tadros, M.D.

April, 29, 2021

Saint Louis, Missouri

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