The Pareto Principle originally referred to the observation that 80% of Italy’s wealth belonged to 20% of the population. More recently, it has come to be known as the 80:20 rule and it posits that 80% of outcomes result from 20% of causes. It is important to note that the Pareto Principle is a generalized concept and not a precise mathematical law. Here are a few examples:
- 80% of a charity’s receipts come from 20% of donors.
- 80% of a company’s profits come from 20% of products and customers.
- 20% of tasks drive 80% of progress.
- 20% of hazards cause 80% of injuries.
- 20% of patients incur 80% of all healthcare expenditures.
- 20% of players are responsible for 80% of points scored in sports.
- 20% of a product’s features lead to 80% of its usage.
The Pareto Principle seemed a bit dry and arcane until I came across this exhibit which is fundamentally optimistic and contains a great deal of wisdom and valuable life lessons.
