# Incidence Rate

Article byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

## What Is Incidence Rate?

Incident rate or incidence density rate refers to the percentage of a population eligible to participate in a survey or market research. Companies use it to determine the level of difficulty or ease of audience reach, research feasibility, and the calculation of the number of persons likely to take part in the survey.

For eg:
Source: Incidence Rate (wallstreetmojo.com)

If the incident rate gets a lower value for selected respondents, then a high cost will occur for conducting market research. Targeted research like business-to-business (B2B) will have a lower incidence density rate. In most cases, a rate below 5 makes market research costly and unfeasible. Predicting disease or any business event in a particular period under observation is critical.

### Key Takeaways

• Incidence rate definition can get stated as a method to analyze the feasibility and cost of conducting research using a certain percentage of qualified correspondents from a pool of a selected population.
• If the value of the rate lies below 5%, then the survey is unfeasible and costly.
• The incidence rate formula can be stated as the ratio of the total number of eligible respondents and the total selected population for the survey.
• Prevalence and incidence density rates differ in respondents, with new cases related to incidence charge and old plus new cases in prevalence.

### Incidence Rate Explained

The incidence rate definition refers to a method of selecting a population for an event for which a certain percentage becomes eligible for the event. Mathematically, one can express the incidence rate ratio as the number of new fresh cases in a period divided by the number of persons at risk for a disease. It is an essential statistical tool to determine an event’s occurrence, like the frequency of a pandemic, foreclosures related to business, and population risk. However, a rate below 5% makes the research or event survey more difficult and costly.

One can also explain the incidence density rate medically, as several pandemics or disease-related cases occur yearly under medical examination. In other words, this rate becomes crucial too for analysts to predict the frequency of an event in the future. As a result, they can prepare themselves to tackle the negatives of the events successfully.

In marketing research, incidence density rate means the percentage of correspondents qualifying to survey out of the total population. As soon as the targeted audience gets classified, the incidence rate percentage decreases. As a result, market research utilizes this charge to study the estimated percentage of people eligible for their survey so that the incidence charge stays within 5%.

To determine, companies invite a fixed number of participants to take their survey. After this, only eligible participants are sorted and noted. It allows companies to estimate the cost to get borne in the research. However, as the targeted audience becomes more specific, the research cost and difficulty increase with decreasing incidence charge percentage.

### Types

The incident rate can get categorized into two following types:

#### #1 – Predicted Rate

It predicts the probability of respondents that may qualify for the event fluctuating. It aids an organization in estimating the respondent number to be sent before, during, and after the survey.

#### #2 – Actual Rate

It denotes those respondents who qualified for the event or study survey. The number is based on the final respondents to whom researchers sent the study.

### Formula

Researchers can express the incidence rate formula in the percentage per person out of a population eligible for market research or survey. Therefore, its formula is mathematically represented below:

Incidence rate = total number of eligible respondents/total selected population for the survey

Now let us assume that

• Re = total number of eligible respondents
• Rt= total selected population for the survey

Therefore, Incidence charge, IR = Re/Rt *100

Moreover, some market research and medical research websites have also developed incidence rate calculators to help calculate the rate.

### Calculation Example

Let us understand this rate using a calculation example. Suppose one has to survey many businesses that closed down during Coronavirus in two years since 2019. After the survey of real businesses in New York, one got the following figures:

Total closed businesses earmarked for the survey: 2000

The total number of new businesses closed down during the pandemic = 1500

Therefore,

Incidence charge = Total new business closed down during pandemic/Total new business closed down during pandemic

= 1500/2000*100

= 7.5 %

One can see that the incidence rate of businesses closing during two years of the pandemic has been 7.5 % for two years, and per year, it is 3.75 %. Hence, the incidence charge is less than 5 % annually, so conducting such surveys could be costly and unfeasible.

### Incidence Rate vs Prevalence

Incidence density rate and prevalence get very close statistically and in market research. However, the two have specific differences, as listed in the table.

How to calculate incidence rate per 100,000?

It can get calculated using the formula of this rate is the following:
IR= total number of eligible respondents / 100000

How to find incidence rate?

One can find the incident rate by selecting a population for research and then finding the percentage of eligible population participating in the survey or event.

How to calculate incidence rate ratio?

Researchers can calculate this rate by using the formula:
Total number of eligible respondents/total selected population for the survey

How to interpret incidence rate?

The incidence rate is an excellent tool for market research companies in determining the feasibility, cost, and ease or difficulty of conducting research using a select few from the large pool of invited audience.

This article has been a guide to what is Incidence Rate and its meaning. We explain it in detail along with its types, formula, calculation, example, and comparison with prevalence. You may also find some useful articles here –