Eli5 Wtf is the difference between geometric growth and arithmetic growth
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**Arithmetic**
Like others have said, arithmetic means you add. If you had a bank account and you put in 10 bucks each week and charted how much money you had in the bank each week, that would be arithmetic growth.
That formula would look like: (Money in bank) = 10 bucks x (the number of weeks)
It can be a little confusing because of the “times” in there when I just said it was adding, but that’s just a faster way of writing it.
Another way that show the adding would be: (Money in bank at week three) = ($10 from week one) + ($10 from week two) + ($10 from week three)
Add more weeks and you’d just add more ten dollars. If you wait one week you have $10. If you wait 10 weeks you have $100. If you wait a full year, you have $520.
**Geometric**
This is a bit harder to give an example for but it’s basically growth by multiplying instead of adding. It tends to start off growing slow and then gets much faster as time goes on.
Imagine you found a genie and wished to be rich, but this genie is a dick mathematician. He says sure, but how rich you get is going to depend on how patient you are. He gives you a magic bank account that you can put in your name whenever you want but once you do it stops gaining money, so you need to make sure you wait until it’s worthwhile.
The way it works is that for how every many weeks it’s been, it worth that many weeks **times** that many weeks.
The formula for that would be: (Money in bank) = (number of weeks)^2 .
Again, the exponent makes it look weird but that’s just a faster way of writing it.
Keeping in the “multiply” it would be: (Money in bank) = (number of weeks) x (number of weeks).
This is where the difference between the two really shows. Week one you would have $1 (much lower than the first example). Week ten you would have $100 (now equal to the first example at 10 week). At a year it would be worth $2704.
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