The Pareto Principle, also known as the 80/20 rule, states that often 20% of the causes create around 80% of the outcomes while the remaining causes are responsible for the rest. Discovered by the Italian economist Vilfredo Pareto, the principle became a valuable rule of thumb that allows our mind to understand all sorts of complex distributions, focus on the essentials, and prioritize what to do next.
the full story
The Pareto Principle, also known as the 80/20 rule, states that often 20% of the causes create around 80% of the outcomes while the remaining causes are responsible for the rest. Or, as a simple rule for self-help: 20% of your effort makes up 80% of your success.
the 80/20 rule
The principle was discovered by the Italian economist Vilfredo Pareto, who first realized that 20% of the pea pods in his garden were responsible for 80% of all the peas, and then that 80% of all the land in Italy was owned by just 20% of its people.
Over time, the principle became a valuable rule of thumb that allows our mind to understand all sorts of complex distributions, focus on the essentials, and prioritize what to do next.
Business insights
Business owners, for example, often realize that about 80% of a company’s income comes from just 20% of the customers, and as a result, know who to give special attention to.
real life example
Constructors who find out that 20% of the hazards result in 80% of the injuries, can take important precautions to eliminate risks.
And software engineers who know that fixing the top 20% of the most-reported bugs eradicates 80% of errors, can spend their time on these top 20 and let the other 80% continue bugging people.
Pareto’s warning
However useful the rule may be, Pareto himself warned against relying too much on the principle when he said: “Men follow their sentiments and their self-interest, but it pleases them to imagine that they follow reason.
And so they look for and always find some theory which, a posteriori, makes their actions appear to be logical. If that theory could be demolished scientifically, the only result would be that another theory would be substituted for the first one, and for the same purpose.”
What do you think?
What do you think of the 80/20 rule? Where can it be applied? And where do we need a more thorough analysis to fully understand what’s going on? Share your thoughts in the comments below! But beware: 20% of the responses might make up 80% of the conversation.
Sources
- Pareto principle – Wikipedia.org
- Pareto distribution – Wikipedia.org
- Vilfredo Pareto – Wikipedia.org
- Alkiayat, M. (2021). A Practical Guide to Creating a Pareto Chart as a Quality Improvement Tool. Global journal on quality and safety in healthcare, 4(2), 83-84.
- Mongin, P. (2016). Spurious Unanimity and The Pareto Principle. Economics and Philosophy, 32(3), 511-532.
Dig deeper!
- Read about how the Pareto Principles relates to a Gaussian Normal Distribution
- Explore a thesis on the problematics of the Pareto Principle
- Read how the principle is used in hospitals as a Quality Improvement Tool
Classroom activity
In this activity students will learn about the Pareto Principle
- Ask the class if they know about the Pareto Principle, and tell them to explain it in their own words.
- Show Sprouts’ video on the Pareto Principle.
- Ask students if they can identify in school or in their own life instances where they used, or noticed the Pareto Principle.
- Ask the class how they would use the principle to their advantage.
- Teach the class that by memorizing only 20% of the most important principles of the lesson they can deduct their way to the remaining 80%, and ace tests.
Collaborators
- Script: Ludovico Saint Amour di Chanaz and Jonas Koblin
- Artist: Pascal Gaggelli
- Voice: Matt Abbott
- Coloring: Nalin
- Editing: Peera Lertsukittipongsa
- Production: Selina Bador
- Sound Design: Miguel Ojeda
