What does 'Decile' mean
A decile is a method of splitting up a set of ranked data into 10 equally large subsections. This type of data ranking is performed as part of many academic and statistical studies in the finance field. The data may be ranked from largest to smallest values, or vice versa.
BREAKING DOWN 'Decile'
In descriptive statistics, a decile is used to categorize large data sets from highest to lowest values, or vice versa. Like the quartile and the percentile, a decile is a form of a quantile which divides a set of observations into samples that are easier to analyze and measure. While quartiles are three data points that divide an observation into four equal groups or quarters, a decile consists of nine data points that divide a data set into ten equal parts. When an analyst or statistician ranks data and then splits them into deciles, s/he does so in an attempt to discover the largest and smallest values by a given metric. For example, by splitting the entire S&P 500 Index into deciles (50 firms in each decile) using the P/E multiple, the analyst will discover the companies with the highest and lowest P/E valuations in the index.
A decile is usually used to assign decile ranks to a data set. A decile rank arranges the data in order from lowest to highest, and is done on a scale of one to ten where each successive number corresponds to an increase of 10 percentage points. In other words, there are 9 decile points. The 1^{st} decile, or D1, is the point which has 10% of the observations below it, D2 has 20% of the observations below it, D3 has 30% of the observations falling below it, and so on.
There is no one way of calculating a decile, however, it is important that you are consistent with whatever formula you decide to use to calculate a decile. One simple calculation of a decile is:
D1 = value of [(n + 1)/10]^{th} data
D2 = value of [2(n + 1)/10]^{th} data
D3 = value of [3(n + 1)/10]^{th} data
.
.
.
D9 = value of [9(n + 1)/10]^{th} data
From this formula, it is given that the 5^{th} decile is the median, since 5(n+1)/10 is the data point that represents the halfway point of the distribution.
The table below shows the ungrouped scores (out of 100) for 30 exam takers:
48 
52 
55 
57 
58 
60 
61 
64 
65 
66 
69 
72 
73 
75 
76 
78 
81 
82 
84 
87 
88 
90 
91 
92 
93 
94 
95 
96 
97 
99 
Using the information presented in the table, the 1^{st} decile can be calculated as:
= Value of [(30 + 1)/10]^{th} data
= Value of 3.1^{st} data, which is 0.1^{st} of the way between scores 55 and 57
= 55 + 2(0.1) = 55.2 = D1
D1 means that 10% of the data set falls below 55.2.
Let’s calculate the 3^{rd} decile:
D3 = Value of 3(30 + 1)/10
D3 = Value of 9.3^{rd} position, which is 0.3between the scores of 65% and 66%
Therefore, D3 = 65 + 1(0.3) = 65.3.
30% of the thirty scores in the observation falls below 65.3%.
What would we get if we were to calculate the 5^{th} Decile?
D5 = Value of 5(30 + 1)/10
D5 = Value of 15.5^{th} position, halfway between scores 76 and 78
D5 is 77.
Also, notice how the 5^{th} decile is also the median of the observation. Looking at the data set in the table, the median, which is the middle data point of any given set of numbers, can be calculated as (76 + 78)/2 = 77 = median = D5. At this point half of the scores lie above and below the distribution.
Deciles are used in the investments field to assess the performance of a portfolio or a group of mutual funds. The decile rank acts as a comparative number which measures the performance of an asset against similar assets. For example, say an analyst is evaluating the performance of a set of mutual funds over time, a mutual fund that is ranked 5 on a decile scale of 1 to 10 means it’s in the top 50%. By splitting the mutual funds into deciles, the analyst can review the best and worst performing mutual funds for a given time period, arranged from the smallest to highest average return on investment.
The government also uses deciles to determine the level of income inequality in the country, that is, how income is distributed. For example, if the top 20 wage earners of a country of 50,000 citizens fall in the 10^{th} decile and earn more than 50% of the total income in the country, one can conclude that there is a very high degree of income inequality in that country. In this case, the government can introduce measures to decrease the wage gap, such as increasing the income tax of the rich and creating estate taxes to limit how much wealth can be passed on to beneficiaries as inheritance.

Median
The median is the middle number in a sorted list of numbers. ... 
Data Science
Data science is a field of Big Data that seeks to provide meaningful ... 
Descriptive Statistics
Descriptive statistics is a set of brief descriptive coefficients ... 
Variability
Variability is the extent to which data points in a statistical ... 
Statistics
Statistics is a type of mathematical analysis involving the use ... 
Valuation
A valuation is the process of determining the current worth of ...

Insights
4 Forces Behind Income Inequality in America
Twothirds of U.S. households saw their income decline or stay flat between 2005 and 2014. A McKinsey report has taken an innovative look at this demographic. 
Investing
5 Best Mutual Funds in a Rising Rate Environment
Find out which five mutual funds can provide the strongest portfolio hedges against the inevitable increase in longterm interest rates. 
Investing
Bond Guru Who Called Last Bear Market Is Bullish
The investor who profited off the Nixon era bear bond market 40 years ago is now buying amid the Trump bond rout 
Investing
Put Some "FIBR" in Your Diet With This Bond ETF
This active, smart beta bond ETF is worth a closer look. 
Investing
Understanding Stock Prices and Values
Find out why a stock with a sixfigure share price can still be a good value. 
Investing
Mutual Fund Ratings: Crucial or Insignificant?
Mutual fund ratings can help investors, but they have their drawbacks as well. 
Personal Finance
Financial data analyst: Job description and average salary
Learn about the average salary for a financial data analyst position and the skills, education, and experience employers require of candidates. 
Personal Finance
What Is the Average Income in the U.S.?
Information about average income and salary in the United States. It's finally on the rise after years of stagnant wages, but large gulfs exist along gender and racial lines. 
Investing
What You Need to Know About Mutual Funds
Mutual funds are a good investment opportunity, but investors should know how they operate.

Understand the What and Why of Stock Splits
A stock split is when a company increases the number of shares issued to current shareholders. Read Answer >>