How to Model Skewed Data with LOGNORM.DIST in Excel

Use LOGNORM.DIST for right-skewed values like insurance claims, where most are small but a few are very large.

You will learn to

• Find the chance a value is below a limit
• Find the chance of a very large value
• Set the parameters from a median

How it works

Many real-world amounts are right-skewed: insurance claims, house prices, incomes, repair times. Most values are modest but a few are very large, and a bell curve fits badly. If the logarithm of the values looks normal, the lognormal distribution fits well.

LOGNORM.DIST takes x and the mean and standard deviation of ln(x) — not of x itself. A handy shortcut: the median of a lognormal is EXP(mean), so if you know the median, the first parameter is LN(median).

=LOGNORM.DIST(5000,8.2,0.9,TRUE)