# Incidence Rate: Definition, Calculation, and Examples

## What Is the Incidence Rate?

The term incidence rate refers to the rate at which a new event occurs over a specified period of time. Put simply, the incidence rate is the number of new cases within a time period (the numerator) as a proportion of the number of people at risk for the disease (the denominator).

This measure is commonly used in epidemiology as a way to denote the occurrence of disease, illness, or accident. This rate only uses new cases rather than previously diagnosed or reported ones. It can also be used to determine the probability of other events, such as financial phenomena like foreclosures. The incidence rate helps experts anticipate future incidents and make plans accordingly.

### Key Takeaways

• The incidence rate measures how often an event, such as disease or foreclosure, is likely to occur over a particular period of time.
• This rate provides the capacity to anticipate future incidents and plan accordingly.
• Incidence is different from prevalence, which measures the total accumulation of cases.
• Pharmaceutical and biotech companies rely on incidence rates when they seek approval from the FDA to get their drugs to market.
• Companies that report positive incidence rates are good picks for investors while those with negative findings often see losses in their stocks.

## How Incidence Rates Work

Experts commonly use incidence rates to determine the probability of an outbreak of disease, illness, or accidents in a given population. As such, it is commonly used among health experts, who often also refer to it as incidence. In the case that the incidence rate is not discussing a disease, it may cover other topics, such as foreclosures or default. The rate is typically expressed as the number of cases per person-time.

In order to determine the incidence rate of a particular event, experts take the number of new cases as a proportion of the population at risk. Both instances take a specified period of time into consideration.

Experts usually take the population at risk from census data. They may also study the progress of selected individuals. For instance, health experts generally conduct studies involving disease in individuals until they either develop the condition, die, opt out of the group, or complete the entire study. As mentioned above, only new cases are considered, which means earlier cases don't apply in the calculation.

The incidence rate provides experts with a snapshot of changes in the event's progression within a population over time. Therefore, it becomes a very important metric for tracking chronic infectious diseases. Experts can make comparisons on the probability of disease across different populations or how a financial phenomenon like foreclosure is likely to take place. Leaders can take action to remedy policies, including better regulation, or to increase options available to curb negative findings, such as health care needs.

When the denominator is the sum of the person-time of the at-risk population, it is also known as the incidence density rate or person-time incidence rate.

## How to Calculate Incidence Rates

In order to calculate the incidence rate of a particular event, take the number of new instances of the event in question (disease, illness, accident, financial event) during a specific period of time and divide that by the total population at risk during that period of time. Experts must determine the length of time and this time period must be long enough to allow a detailed study.

The result is generally presented as a number of cases in a certain amount of the population. It's important to make sure that no information is duplicated in order to get as much of an accurate determination of the rate.

Let's say that experts want to determine the incidence rate of foreclosure in Anytown, U.S. The total number of homeowners in town is 10,000. Experts undertake the study for a full year and learn the number of new foreclosures is 200. Using the formula above, they determine that the incidence rate of foreclosure in Anytown is 0.02.

## Examples of Incidence Rate

Let's say a county in the U.S. with a population of 500,000 may have had 20 new cases of tuberculosis in 2013. This translates to an incidence rate of four cases per 100,000 persons. This is higher than the incidence rate of TB for the entire U.S.—9,852 new TB cases in 2013—for an incidence rate of three cases per 100,000 persons.

Now let's take a look at an example to determine trends using incidence rates. Consider a study on lung cancer rates released in January 2014 by the Centers for Disease Control and Prevention. The study found that thanks to tobacco control efforts, lung cancer incidence rates from 2005 to 2009 declined by 2.6 per year among men, from 87 to 78 cases per 100,000 men. The lung cancer incidence rate for women fell 1.1 per year from 57 to 54 cases per 100,000 women.

## Incidence vs. Prevalence

Incidence should not be confused with prevalence. Remember that incidence measures the likelihood of occurrence during a specific time period. Prevalence, on the other hand, is a measure of the actual number of cases of a condition or illness in a population at a certain point in time. Therefore, it is the total accumulation of incidences over a period of time.

Here's an example to show how the two terms are distinct. The incidence of loan foreclosures would be the number of foreclosed loans over a time period. Prevalence would be the total number or all of the incidences added up. While incidence enables an assessment to be made of the risk of contracting a disease, prevalence shows whether the disease is widespread or not.

The incidence rate can be further categorized by different characteristics such as race, gender, or age.

## Incidence Rates and Market Research

Incidence rates are commonly used by the Food and Drug Administration (FDA) to determine if and when pharmaceutical companies are allowed to take their drugs to market. In order to do so, these companies are required to conduct clinical trials (over a series of phases) and apply for FDA clearance to determine the efficacy of their drugs.

Companies enlist individuals to take part in studies. These people are given the drug or a placebo during each phase. According to the FDA, "the reviewer should identify the subset of trials in phase 2 and 3 databases that will provide the best estimate of rates and develop tables of event rates based on that judgment" in order to determine the incidence rate of any adverse (side) effects. These findings are presented in tables that are reported to the FDA. Incidence rates show the rate at which reactions take place along with the severity of each one.

Companies rely on positive results and approval in order to get their drugs to market, which is usually a long, drawn-out process. Meeting these goals means good news for investors, especially if the results are really positive. But those that aren't able to achieve these milestones often see their stocks drop. These losses can be offset if drug companies are undertaking other, positive trials or if they have products on the market.

## How Do You Interpret an Incidence Rate Ratio?

The incidence rate ratio refers to the ratio of two different rates of incidence. Both are required to have the same time period when calculating them individually.

## What Is the Difference Between an Incidence Rate and a Prevalence Rate?

• The prevalence rate is the relative proportion of total cases observed in a population over some period of time.
• The incidence rate is the rate of new cases observed in a population over some period of time.

## How Do You Calculate Incidence Rates in Market Research?

In market research, incidence rate refers to the frequency of people who are able to take part in a particular study. This is calculated by taking the total number of people who are qualified to participate by the total number of those who responded to the call for the study, including those who didn't qualify to take part.

## How Do You Calculate Person-Time Incidence Rates?

Person-time incidence rates, which are also known as incidence density rates, are determined by taking the total number of new cases of an event and dividing that by the sum of the person-time of the at-risk population.

## What Is the Incidence Rate of HIV in the U.S.?

Experts indicate that the incidence rate of HIV in the U.S. remains stable. In 2021, t was reported to be 13.3 per 100,000 people.

## The Bottom Line

Incidence rates are commonly used by experts in a variety of fields from health care to the financial industry. By studying the probability of occurrences of things like disease and foreclosure in a given population, experts can make sound decisions on the need of people in the future. This includes things like health care services and medication, or changes in regulation and financial practice standards. And if you're investing in sectors like pharmaceuticals and biotech, you'll want to take a look at a company's incidence rates to see how far your money will go—not just the company's bottom line.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
1. Centers for Disease Control and Prevention. "Lesson 3: Measures of Risk."

2. University of Manitoba. "Concept: Prevalence and Incidence."

3. HIV.gov. "U.S. Statistics."

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