Dec '25 • 💻 Technical Skills
The Cumulative Distribution Function in Energy Economics
In Energy Economics/ Finance the CDF of the standard normal distribution is very popular. It appears in many economic models.
If a model involves risk, probability, (like strike prices), the CDF is usually the tool doing the calculation.
No need to know all the details e.g. mathematical formulas etc.
We just need to interpret it.
Also in our code we need to implement it. You can copy-paste it from this file (attached) into any model you develop that includes the CDF.
Specifically this is the CDF of the standard normal distribution.
CDF = Cumulative Distribution Function. The word "Cumulative" means "accumulating" or "summing up".
Attached is a Python file (.ipynb for Jupyter notebook) that implements the Cumulative Distribution Function (CDF) for the standard normal distribution in Python, in two ways.
The video explains all we need to know about the CDF for energy economics.
Such a question is very frequent in interviews. E.g. to explain what the CDF is, and how to implement it in Python.
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The Cumulative Distribution Function in Energy Economics
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