Understanding the Pareto Principle (The 80/20 Rule)

Originally, the Pareto Principle referred to the observation that 80% of Italy’s wealth belonged to only 20% of the population.

This is a companion discussion topic for the original entry at http://betterexplained.com/articles/understanding-the-pareto-principle-the-8020-rule/

It exist an outdated network designer rule that’s called “The 80/20 rule”. It says that 80% of the network traffic should be internal and 20% should be external. Today it’s more like 20/80 ^^

My “Strategic Management of Technology and Innovation” class loved this interpretation of the “Pareto Principle”. It was done with a video they could relate to.

Hi Christina, I’m glad your class liked it! Yes, there’s many examples out there which are more interesting than “Worker A does 80% of his work in 20% of the time”. Thanks for dropping by.

[…] This video was also a great example of the 80/20 rule. In 3 minutes you got the gist of the presentation. Would it have been 10-times better if it was 30 minutes long? No. […]

[…] A great breakdown of that good old 80/20 rule (otherwise known as the Pareto Principle) that seems to pop up everywhere. […]

Kalid, your site is great! Regarding the Pareto principle, have you read Mandelbrot’s book “The (Mis) Behavior of Markets?” His was the first treatment I’d encountered of Pareto’s work, and was very enlightening.

Hi Bernard, thanks for the comment! That sounds like an interesting book, I’ll have to add it to the reading list :slight_smile:

Lovely page to explain the Pareto principle … and the videos to support the understanding are excellent. Hope to see such pages on more topics.

Thanks Amit! I like finding different explanations for things (vs. using typical “business” metrics like worker productivity), and I’m glad you enjoyed it. I’ll try to keep the posts coming.

Have been using this concept, just didn’t know it had a name…and such structure.

I do collage assembly for stress management issues. In order to clarify focus for a topic/theme for the collage the questions asked require one to seperate behavior from emotions.

80% of the behavior is dictated by 20% of our emotions.

Person acts angry all the time. They are short tempered and easily angered. They snap at any correction or observation no matter how well intended. They are on the defensive and always in hyperdrive…Seemily “manic” or “hyperactive” may even be called ADHD or ADD. In reality they are suffering from the 20% piece which is…ALIENATION
and are hypervigilant in behavior…to protect their base. Therefore 80% of their behavior is run by 20% of their emotions.

It does not add up to 100% of who this person is. It merely outlines behavior especially under negative stress. 20% of emotions effect 80% of behavior.

When setting up for a collage, the question asked is…"What does angry look like? The collage demonstrates the truth in the 20%…and the results yield that the person is acting angry ( the 80% piece)…because of their isolation. The 20% piece is unveiled.

Am I applying it properly?

Thanks…I enjoyed the article.

Hi Matilda, thanks for the comment! It’s hard to apply this rule to things that can’t be measured (like emotions), but the general principle may apply: a few events may determine the majority of our behavior. One argument in the morning could put you in a bad mood for the entire day.

The general idea behind the Pareto principle is that “not all things are equal” – some contribute more than others. 80/20 is a general rule of thumb, but for things that can’t be quantified (like emotions), the concept that some things count more than others is probably the key insight. Hope this helps.

Thank you Kalid for that explination. It does help. The way I translate it in emotional measure is… no matter how bad some of my experiences have been, or for how long some painful situations have lasted…because “not all things are equal”…it only takes one smile or one act of kindness or one happy memory to ballance out a ton of sadness…at least for me. I find equilibrium in the simple things of life…

That is how I apply the Pareto priciple…thank you for this sense of community…it ballances out a ton of having my ideas and opinion passed over.

[…] The second is the Pareto Principle (or the Juran Assumption, if you’re a stickler).  This one started as straight-up economics.  But the more you think about it, the more it sounds like interesting advice. […]

I have a much better understanding of the Pareto principle after reading this article, thanks!

@Matilda: You’re welcome, that’s an interesting way of looking at this idea which is usually limited to math/financial topics :slight_smile:

@Jeffrey: Glad you enjoyed it!

It’s interesting.

While 80% of the physical difference comes in the first fifth, 80% of the emotional impact comes from the last fifth. Car #4 looks pretty stale and cartoony, while car #5 is what I’d call awesome.

Your example is actually two levels deep, at least.

Hi Alrenous, that’s a really interesting way to look at it. I hadn’t thought about the other types of impact operating in reverse – from a psychological point of view, it’s the final 20% that brings it to life. Thanks for the comment.

I had not heard of the pareto principle prior to to doing a search on time management google i tried quite a few sites but they didn’t really explain the 80 20 concept to me.

I work in real estate and found this site very helpful it has (I hope) headed me in the right direction

I have been looking for but did not find a discusssion regarding the underlying principles of the 80/20 rule. For example, the rule is only valid where the data items are independent of each other. ie. where there is no interrelationship. For example,from a population point of view, 20% of the population will earn 80% of the income but if they were employed by the same organisation would this still be the case? In this instance, the data is not independent and is significantly influenced by the employment conditions and structure of the organisation. In Australia our capital city (Canberra) is mostly made up of senior public service personnel and I would guess that the 80/20 rule would not apply here because of the reason stateed above.