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The Pareto principle states that for many outcomes roughly 80% of consequences come from 20% of the causes (the “vital few”).[1] Other names for this principle are the 80/20 rule, the law of the vital few, or the principle of factor sparsity.[2][3]

Management consultant Joseph M. Juran developed the concept in the context of quality control, and improvement, naming it after Italian economist Vilfredo Pareto, who noted the 80/20 connection while at the University of Lausanne in 1896. In his first work, Cours d'économie politique, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population. The Pareto principle is only tangentially related to Pareto efficiency.

Mathematically, the 80/20 rule is roughly described by a power law distribution (also known as a Pareto distribution) for a particular set of parameters, and many natural phenomena have been shown to exhibit such a distribution.[4] It is an adage of business management that "80% of sales come from 20% of clients".[5]

In economics

Pareto's observation was in connection with population and wealth. Pareto noticed that approximately 80% of Italy's land was owned by 20% of the population.[6] He then carried out surveys on a variety of other countries and found to his surprise that a similar distribution applied.

A chart that gave the effect a very visible and comprehensible form, the so-called "champagne glass" effect,[7] was contained in the 1992 United Nations Development Program Report, which showed that distribution of global income is very uneven, with the richest 20% of the world's population generating 82.7% of the world's income.[8] Among nations, the Gini index shows that wealth distributions vary substantially around this norm.

The Pareto principle also could be seen as applying to taxation. In the US, the top 20% of earners paid roughly 80-90% of Federal income taxes in 2000 and 2006,[10] and again in 2018.[11]

The causes of wealth owing so much to the "vital few" have been attributed to distributions of multiple talents, with the few having all the required talents and environments leading production in a meritocracy. Others have suggested that it may result from chance, Alessandro Pluchino at the Italian University of Catania suggesting that “The maximum success never coincides with the maximum talent, and vice-versa,” and that such factors are the result of chance.[12]

The principle also holds within the tails of the distribution. The physicist Victor Yakovenko of the University of Mar

A chart that gave the effect a very visible and comprehensible form, the so-called "champagne glass" effect,[7] was contained in the 1992 United Nations Development Program Report, which showed that distribution of global income is very uneven, with the richest 20% of the world's population generating 82.7% of the world's income.[8] Among nations, the Gini index shows that wealth distributions vary substantially around this norm.

The Pareto principle also could be seen as applying to taxation. In the US, the top 20% of earners paid roughly 80-90% of Federal income taxes in 2000 and 2006,[10] and again in 2018.[11]

The causes of wealth owing so much to the "vital few" have been attributed to distributions of multiple talents, with the few having all the required talents and environments leading production in a meritocracy. Others have suggested that it may result from chance, Alessandro Pluchino at the Italian University of Catania suggesting that “The maximum success never coincides with the maximum talent, and vice-versa,” and that such factors are the result of chance.&#

The causes of wealth owing so much to the "vital few" have been attributed to distributions of multiple talents, with the few having all the required talents and environments leading production in a meritocracy. Others have suggested that it may result from chance, Alessandro Pluchino at the Italian University of Catania suggesting that “The maximum success never coincides with the maximum talent, and vice-versa,” and that such factors are the result of chance.[12]

The principle also holds within the tails of the distribution. The physicist Victor Yakovenko of the University of Maryland, College Park and AC Silva analyzed income data from the US Internal Revenue Service from 1983 to 2001, and found that the income distribution among the upper class (1–3% of the population) also follows Pareto's principle.[13]

In computer science the Pareto principle can be applied to optimization efforts.[14] For example, Microsoft noted that by fixing the top 20% of the most-reported bugs, 80% of the related errors and crashes in a given system would be eliminated.[15] Lowell Arthur expressed that "20 percent of the code has 80 percent of the errors. Find them, fix them!"[16] It was also discovered that in general the 80% of a certain piece of software can be written in 20% of the total allocated time. Conversely, the hardest 20% of the code takes 80% of the time. This factor is usually a part of COCOMO estimating for software coding.

In sports

It has

It has been argued that the Pareto principle applies to sport, where leading players often take the majority of wins. For instance in baseball, the Pareto principle is reflected in Wins Above Replacement (an attempt to combine multiple statistics to determine a player's overall importance to a team). "15% of all the players last year produced 85% of the total wins with the other 85% of the players creating 15% of the wins. The Pareto principle holds up pretty soundly when it is applied to baseball."[17] It has been suggested (but not tested) that the principle applies to training, with 20% of exercises and habits having 80% of the impact, suggesting trainees should reduce the variety of training exercises to focus on this effective set.[18]

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