statistics problem-calculating percentile. i will best!!

Question Description

A survey of over 1,713 people had an average student load debt of $32,795 (s.d. = $4,997)

who have excessive levels of debt ( >=85th percentile) are more likely to default on their loans. What debt value would mark this amount?

Final Answer

You can quickly calculate this in excel or similar, it has a dedicated function for calculating the inverse density function (taking a percentile and converting it to the original statistic):

Norm.inv(P(x),mean,sd) = Norm.inv(0.85,32795,4997) = 37974.05765

So the 85th percentile of the distribution is at 37974.06, so everybody with > $37974.06 debt are considered more likely to default.

Hope this was helpful!

iainharlow (1041)
UC Berkeley

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