It's a good question, to which there really isn't a concise answer.
Handicap is used to level the playing field so that the lowest average bowlers can compete equally with higher average bowlers. Over the years, studies shown that actually 116% handicap is needed to accomplish that. However, I know of no leagues that would do that.
The most common percentage used in handicap across the country is 90%. The important figure, however, is the base. It's important to make sure the base is reasonably higher than the potential of the highest average players of the league.
For example, if you have a person who last year averaged 218 and that was the highest average of any of your league members last year, it would be best to set the base at 225 or 230. This way EVERYONE receives handicap. If the base was set at 200, then ANY player who averages over 200 mathematically has an advantage over anyone who has less than 200, even with the players under 200 receiving a handicap.
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Well, 90% of 200 working of a 200 average = 0 80% of 220 working off a 200 average = 16