The Rule of 70 is a quick, easy way to estimate the number of years required for a quantity to double given a fixed annual rate of compounding growth.
The Rule of 70 states that years to double for an input equals 70 divided by the annual growth rate. So, if annual growth is 10% (we normalize 10% as an integer), then 70/10 = 7 years. If annual growth is 20%, then 70/20 equals 3.5 years for the input to double.
The rule of 7 is useful across the board, but is often used to calculate GDP growth and investment returns—just keep in mind that it’s most accurate for growth rates under 10%, and doesn’t account for growth that isn’t equally distributed (just think of it as a back-of-the-napkin calculation)
Here’s the rule of 70 applied to different annual growth rates:
1%: 70/1 = 70 years2%: 70/2 = 35 years3%: 70/3 = 23.33 years4%: 70/4 = 17.5 years5%: 70/5 = 14 years6%: 70/6 = 11.67 years7%: 70/7 = 10 years8%: 70/8 = 8.75 years9%: 70/9 = 7.78 years10%: 70/10 = 7 years
That’s all from me! Here’s some other fun stories:
Read about the Income Approach to GDP here.Read more economics stories here.Also, to learn more about the oil market, consider reading about PADD Districts, the Why WTI and Brent are Crude Oils, and Why There are Price Differences Among Crude Oils, and my Oil & Gas Terms Guide.