Pareto Principle PowerPoint Diagrams

What is the Pareto 80/20 Law?

While many people have heard of the 80/20 rule, relatively few fully understand what it means. However, the Pareto 80/20 Rule or Pareto Principle as it is sometimes called is considered a tenant of economics, sports, software, science, and other areas where there is some type of production.

What is the Pareto Principle?

This is the law that states that 80% of the effects will come from 20% of the causes. Or to put it another way, 80% of the production will come from 20% of the producers. The principle was named after Vilfredo Pareto, an Italian economist, who first noted the 80/20 law in 1896. Pareto noticed that in his garden 80% of the peas were being produced by 20% of the peapods.

It didn’t take long for Pareto to notice that the 80/20 rule applied to other areas as well. He observed that 80% of the land in all of Italy at the time was owned by 20% of the population. It was not long before others took notice and today the 80/20 law is now applied across several disciplines.

Impacts Around the World

Pareto’s observations about land ownership in Italy spread out as he conducted surveys in other countries and witnessed the economic impact of the 80/20 rule which has ramifications even in the modern world. Sometimes called the “champagne glass” effect, a 1992 United Nations Development Program Report demonstrated that global income is controlled by roughly 20% of the population which holds sway on over 80% of the money distributed around the world.

It goes beyond the economic as in computer science the Pareto Principle dictates that repairing the most common 20% of the bugs or errors means that about 80% of the problems or crashes to the system are eliminated. Furthermore, observations of load testing dhow that 80% of the total traffic will occur in 20% of the overall time allotted.

Even in sports, it has been demonstrated that 20% of the exercises performed to prepare athletes will have 80% of the impact on the events. This does not mean that 80% of the exercises are worthless, but rather that they have a lesser effect than the 20%. The same is true of dieting and lifestyle habits as 20% of them will have 80% of the impact.

How the Pareto Principle Can Be Addressed

While there is no singular explanation of the 80/20 rule, it does exist in many disciplines which means that when properly identified, individuals, businesses, and organizations can become more efficient when addressing their impact.

For example, if 20% of the hazards at the workplace cause 80% of the accidents, then identifying and targeting the 20% is more efficient and can be done faster to greatly reduce the chances of injuries at work. The same principle can be applied to different applications so that causes can be addressed more efficiently to have a greater impact.

The Pareto 80/20 Rule is applicable in so many different industries, even when they seemingly have little to nothing to do with each other.