I heard this report on the radio this morning (link to a printed version of it). It reports that
"Gross domestic product shrank 0.9% in the first three months of the year, the Cabinet office said, giving an annualised rate of contraction of 3.7%."
And so that caught my attention as being incorrect. I said, they are probably taking a quarterly rate and calculating the cumulative rate as in ((1 + QuarterlyRate/100)**4 - 1) * 100 and getting something like 3.64889225609997%, which they (wrongly) rounded up to 3.7%. Clearly the cumulative annual rate is not QuarterlyRate * 4.
But their calculation is incorrect since the rate is negative (not rate of growth but rate of shrinkage) and so the result is really -3.5516909439, which is less than 3.6%.
You know, average person has very poor feeling for numbers as they relate to quantities. Research has shown (I do not remember the source) that anything larger than a 3 digit number is beyond our intuitive comprehension. Proportion of "1" to "1000" is felt differently from the proportion of a million to a "billion," which is the same as the former one. I am particularly sensitive to those things likely due to my scientific training.
