Pareto's 80/20 Rule

Pareto's 80/20 Rule

In 1906 Vilfredo Pareto made an observation on the unequal distribution of wealth in Italy. Pareto found that twenty percent of the people owned eighty percent of the wealth. Based on his observation, Pareto developed the 80/20 Rule, a mathematical formula describing what he saw. Stemming from Pareto’s observation and subsequent creation of the 80/20 Rule, others began to make similar observations in a vast array of fields.

For example, Dr. Joseph Juran found the 80/20 Rule applicable in quality management as he observed, “vital few and trivial many” (Reh, 2005, p.76). In general terms, what this means is that with anything, twenty percent, which is the few, is vital as opposed to eighty percent, the many, which are trivial. Internalizing this principle, one can identify that twenty percent of the effort made towards a goal produces eighty percent of the results; in knowing this one can make sure to focus their time and energy on the twenty percent to ensure accomplishment.

Reference

Reh, J. F. (2005). Pareto’s principle-The 80-20 rule. Business Credit, 107, 7, 76.

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