Decile

What is Decile?

In descriptive statisticsDescriptive StatisticsDescriptive statistics is used to summarize information available in statistics, and there is a descriptive statistics function in Excel as well. This built-in tool is found in the data tab, in the data analysis section.read more, the term “decile” refers to the nine values that split the population data into ten equal fragments such that each fragment is representative of 1/10th of the population. In other words, each successive decile corresponds to an increase of 10% points such that the 1st decile or D1 has 10% of the observations below it, then 2nd decile or D2 has 20% of the observations below it, and so on so forth.

Decile Formula

There are several formulae in vogue to calculate decile, and this method is one of the simplest one where each decile is calculated by adding one to the number of data in the population, then divide the sum by ten and then finally multiply the result by the rank of the decile, i.e., 1 for D1, 2 for D2… 9 for D9.

Di = i * (n + 1) / 10 th data
Decile-Formula

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For eg:
Source: Decile (wallstreetmojo.com)

where n = Number of data in the population or sample

i is the ith decile can be represented as,

  • 1st decile, D1 = 1 * (n + 1) / 10 th data
  • 2nd decile, D2 = 2 * (n + 1) / 10 th data

and so on..

Steps to Calculate Decile

Lest follow the below steps.

  1. Firstly, determine the number of data or variables in the population or sample, which is denoted by n.

  2. Next, sort all the data or variables in the population in ascending order.

  3. Next, based on the decile that is required, determine the value by adding one to the number of data in the population, then divide the sum by ten and then finally multiply the result by the rank of the decile as shown below.


    ith decile, Di formula = i * (n + 1) / 10 th data

  4. Finally, on the basis of the decile value, figure out the corresponding variable from among the data in the population.

Examples (with Excel Template)

Let us suppose that John has been given a set of unsorted data points. He has been asked to sort the number and cut them into 10 equal sections. So, help John do the task of sorting the following 23 random numbers valued from 20 to 78 and presenting then as deciles. The raw numbers are:24, 32, 27, 32, 23, 62, 45, 77, 60, 63, 36, 54, 57, 36, 72, 55, 51, 32, 56, 33, 42, 55, 30.

Given,

  • n = 23

Firstly, sort the 23 random numbers in the ascending order like below,

23, 24, 27, 30, 32, 32, 32, 33, 36, 36, 42, 45, 51, 54, 55, 55, 56, 57, 60, 62, 63, 72, 77

Decile Formula Example 1

So, the calculation can be done as follows-

Decile Formula Example 1.1jpg

Similarly, we can calculate each decile as shown above,

Now, D1 = 1 * (n + 1) / 10 th data = 1 * (23 + 1) / 10

= 2.4th data i.e. between digit no. 2 and 3

which is = 24 + 0.4 * (27 – 24) = 25.2

Again, D2 = 2 * (23 + 1) / 10 th data

= 4.8th data i.e. between digit no. 4 and 5

which is = 30 + 0.8 * (32 – 30) = 31.6

Again, D3 = 3 * (23 + 1) / 10 th data

= 7.2th data i.e. between digit no. 7 and 8

which is = 32 + 0.2 * (33 – 32) = 32.2

Again, D4 = 4 * (23 + 1) / 10 th data

= 9.6th data i.e. between digit no. 9 and 10

which is = 36 + 0.6 * (36 – 36) = 36

Again, D5 = 5 * (23 + 1) / 10 th data

= 12th data i.e. digit no. 12

which is 45

Again, D6 = 6 * (23 + 1) / 10 th data

= 14.4th data i.e. between digit no. 14 and 15

which is = 54 + 0.4 * (55 – 54) = 54.4

Again, D7 = 7 * (23 + 1) / 10 th data

= 16.8th data i.e. between digit no. 16 and 17

which is = 55 + 0.8 * (56 – 55) = 55.8

Again, D8 = 8 * (23 + 1) / 10 th data

= 19.2th data i.e. between digit no. 19 and 20

which is = 60 + 0.2 * (62 – 60) = 60.4

Again, D9 = 9 * (23 + 1) / 10 th data

= 21.6th data i.e. between digit no. 21 and 22

which is = 63 + 0.6 * (72 – 63) = 68.4

Decile will be –

Example 1.2jpg

Therefore, the value is as follows –

Decile Formula Example 1.3

D1 =25.2

Relevance and Uses

It is very important to understand the concept of decile because it is widely used in the field of portfolio management to assess the performance of a portfolio. The ranking helps to compare the performance of an asset with other similar assets. The decile method is also used by the government to determine the income distribution or level of income equality in a nation. This method of dividing data is used as part of many statistical and academic studies in the fields of economics and finance.

You can download this Template from here – Decile Formula Excel Template.

Recommended Articles

This has been a guide to Decile Formula. Here we will learn how to calculate deciles along with some practical examples in Excel and a downloadable excel template. You can learn more about financial analysis from the following articles –

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Comments

  1. Marian Romende says

    It helps me a lot. I totally understand those explanations.

    • Dheeraj Vaidya says

      Thanks for your kind words!

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