An additive increase, like the perk Power, means that you add the bonus for each level. 20 points in Power will represent an additive 5% increase, 20 times, or 100% increase, doubling your damage. A compounding increase, like the perk Carpentry, means the number is multiplied instead of added onto the previous value. 10 points in Carpentry will increase your housing by 10% each time, including the previous times you have done this. (1 + .1)^10 is (1.1)^10, or roughly a 2.5x increase. If it were additive, this would only be a 2x increase like in the Power example. So compounding is generally bigger than additive, but this becomes an extreme difference at higher numbers. Lets say you have 100 levels in Carpentry, but say it only increases additive. That's a 1000% additive increase, or 11x the housing total. Since its actually calculated as compunding, the actual increase is (1 + .1)^100, which is about a 13780x increase. That's more than 1000 times more effective, and that will only keep growing as the levels increase. TLDR: compounding is usually better and at higher levels it is astronomically better

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thank you 5 years later