The increment is the positive variation that the numerical value registers in a variable. This, in a certain period of time.

In other words, an increase is the circumstance in which, in the economic field, the value attributed to an indicator such as a price, the gross domestic product (GDP), the interest rate, among others, increases.

It should be noted that the increase can only be calculated with precision when the variable in question is quantitative, that is, if it has a numerical value.

Likewise, it is worth saying that an increase only occurs when the study variable has changed over time. Furthermore, if said variation is negative, we would be facing a decrease.

Another issue to take into account is that the effect of an increase is relative. For example, if we refer to the price of a product, an increase disadvantages the consumer, but implies higher income per unit for the seller.

Origin of the word increment

At the etymological level, the term increment comes from the Latin "incrementum". This, in turn, is made up of the prefix "in", which refers to the internal; by the verb “crescere”, which means to grow or increase; and the suffix "mentum", which refers to a result.

According to its meaning in the broadest sense, an increase can be of volume, quantity or intensity. In the latter case, we could measure, for example, the intensity of the sound or volume in decibels.

Increment example

Let's imagine that in a country the GDP per capita was 26,000 euros in 2018. However, this indicator rose to 27,500 euros in 2019

So, to calculate the increase, in percentage terms, we could use the following formula:

(VF-VI) / VI

VF: Final value

VI: Initial value

27.500-26.000/26.000= 0,0577= 5,77%

This means that GDP per capita from one year to another rose by 1,500 euros or 5.77%.

Tags:  passes derivatives economic-analysis 

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