Formula or Equation Note. The incremental capital output ratio (ICOR) is defined as the ratio between investment in some previous period(s) and the growth in output in the subsequent period.Needless to say, ICOR calculation is based on constant price data.ormula or Equation Note. The incremental capital output ratio (ICOR) is defined as the ratio between investment in some previous period(s) and the growth in output in the subsequent period. Needless to say, ICOR calculation is based on constant price data.