PE = (E1-E2)/ E1, where E1 is the error for the benchmark forecast, which might be based, say, on the method currently used. The measure was proposed by the sociologists, Ohlin and Duncan (1949), for cross-sectional data. The comparison to a benchmark is also used in Theil’s U and in the Relative Absolute Error.

• Ohlin, L. E. & O. D. Duncan (1949), “The efficiency of prediction in criminology,” American Journal of Sociology, 54, 441-452.