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Please forgive me a really simple question: Am I calculating the relative error reduction correctly?

Example: Model 1 gets 80/100 examples wrong, model 2 gets only 20/100 examples wrong, so the 80 errors are reduced by 60, which is an error reduction of 75%.

So the relative error reduction formula seems to be

(m1_error - m2_error) / m1_error * 100.0 

What if it's vice versa? Model 1 gets 20/100 wrong, but model 2 gets 80/100 wrong. By what amount does model 2 "reduce" the error? The formula gives -300%, so it increases the error by 300%.

Does that make sense?

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It does make sense. Reducing the error by -300% is increasing it by 300%. And increasing 20 by 300% gives 80.