What is a Decile Rank?
A decile rank is a single number on a scale of 1 to 10, which corresponds to a percentage, usually ten percentage points. For example, a decile of five might mean top 50%, or a decile of one would mean top 10%. This type of ranking may be used to determine the quality of investments or the rankings of schools.
The decile rank is a comparative rank, where performance is measured against other similar things. For example in mutual funds, each fund would receive a ranking based on their performance against other funds. So a decile rank of two would usually mean that the mutual fund was in the top 20% on rate of return. It might be considered a better investment than a mutual fund with a decile rank of three or four.
This comparison is made over time, so a mutual fund that has a good month or two of returns probably wouldn’t rank high if the rest of the months in a year were low performing months, unless all other mutual funds also performed poorly in that same time. Usually if you’re analyzing investments by decile rank, you want to understand the amount of time being discussed. Is the ranking the result of comparisons of a month, year, two years, and et cetera?
Longer lengths of time can be a little deceiving though, because performance is averaged over that length of time. A mutual fund could perform really well half the year, and then have taken a sudden dip in performance that may not be reflected tremendously in rank. Knowing how a fund currently compares to other funds, and how it has performed over time help you to understand if you are making a good investment.
It also helps to know what types of funds are being compared, since many have different investment strategies. Sometimes all mutual funds are compared without this consideration, which is called an all rank. Other times, only mutual funds that have the same type of investment strategies are measured against each other, called an objective rank.
You’ll also note the concept of decile rank when people discuss ranking schools. In this case, the ranking may be positive or negative, depending upon what is being compared. For instance, schools might be ranked by decile based on percentage of children being educated who are English language learners or who have a low socioeconomic status. In this case, the top rankings of one or two might mean that the school has a very high percentage of kids of this type, rather than a low percentage.
@irontoenail - It is difficult, because I think high achieving kids should have the best chance at life, but on the other hand if you shuffle all the low achievers into the worst schools, they aren't going to do any better.
Personally, I think the best thing to do is to try and get all schools up to a certain standard, so that all kids have a good chance to achieve.
Otherwise, it's not fair. The lower decile schools get the worst kids, so they don't ever end up getting the funding from alumni that the better schools do, and the worst kids get the worst schools, so they never do well enough to become great alumni!
It's a bad cycle, but I don't know what the solution to it is. Maybe it lies outside the decile system.
@indigomoth - It's not a bad system, really. There are plenty of places that just give a certain amount per child, or who give funding based on available programs, or worse, on the success of the school.
If schools are awarded money based on their success, they have fewer chances to be successful because they get less and less funding.
We have access to all kinds of decile information about our schools, including their ranking for various subjects, their success ranking, and so forth. In some ways, I think this is wrong, because it means that all the kids want to go to the more successful schools and they get to pick and choose so that they stay successful.
I've mostly heard of decile being related to school. In my country, schools are usually allocated more or less funding depending on their socioeconomic decile.
The schools with kids from the poorest neighborhoods get more funding, while the schools with kids from the richest neighborhoods get the least funding.
It's a flawed system, as they don't really judge the income of each family, so much as assigning a number to each neighborhood and then judging them on which neighborhood they live in.
And I know plenty of middle class people who live in poor neighborhoods because they want to save money, and plenty of poor people who live beyond their means. Plus because it's on a decile system, it means that two schools that are nearly identical, but one is slightly less well off than the other will get more funding because of ranking.
Not to mention poverty isn't always the best indicator of kids who need extra help. But, I guess they can't micromanage every aspect of schools and they have to have some way of figuring out how to allocate the money.
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