Nice explanation TRW - I mentioned "percentage" error in my first reply, but they didn't seem to either pick up on that, or didn't understand it.
Jaided - example ---- So, if you're 8 mph off at 60 (it reads 68 but you're going 60) - Then for every 68 miles it says you go, you only went 60 -- assuming your odometer and speedometer are off the same %. As mentioned above, you must check each independantly if you want to know that for sure. Let's assume the odometer is off that amount. That means your odo is reading 13% too many miles - so your fuel economy is off (you think it's better than it actually is) by 13%. Instead of covering 200 miles, you're only covering 176.5 miles. Use that number to recalculate. 20 miles to the gallon just turned into 17.5 mpg.
jpc - you have to do this stuff if you want your speedo to be accurate. Go to the link I posted in my first reply, and you'll see how you compensate for different gears in different models. The speedo simply measures how fast the driveshaft is turning. When you change the rear gear in the car (2.73 to 3.73 for example), the driveshaft now must turn 3.73/2.73=1.37 times faster than it did before to move the car at the same road speed. That means instead of turning over 2000 rpm at a certain speed, you'll need to turn 2730 rpm with the bigger gear. If you don't change the speedo cable gear, to allow for that difference, your speedo will be off by that percentage.