What is Pareto's Law?

Pareto's law, or the Pareto principle, or the 20/80 principle - a rule of thumb named after the economist and sociologist Vilfredo Pareto, in its most general form, it is formulated as “20% of the efforts give 80% of the result, and the remaining 80% of the efforts - only 20% of the result ". It can be used as a basic setting in the analysis of efficiency factors of any activity and optimization of its results: by correctly choosing the minimum of the most important actions, you can quickly get a significant part of the planned full result, while further improvements are ineffective and may be unjustified (according to the Pareto curve).

The figures given in the law cannot be considered unconditionally accurate: they are rather just a mnemonic rule than real guidelines. The choice of the numbers 20 and 80 is also a tribute to the merits of Pareto, who revealed a specific structure of income distribution among Italian households, which was characterized by a concentration of 80% of incomes in 20% of families. But any other specific distribution may have a different structure, and for each individual task, an appropriate analysis should be carried out, aimed at identifying a specific relationship between the proportion of resources expended and the results obtained.

Compliance with the principle is very common in many different areas. For example, in the fact that 20% of people own 80% of the capital, or 80% of users visit 20% of sites, 20% of buyers or customers (regular) bring 80% of the profit. But it should be borne in mind that in these statements, not the given numerical values ​​are fundamental, but the very fact of their significant difference.

But Pareto's law also has its weaknesses. Despite the fact that “20% of the effort gives 80% of the result”, it is often impossible to organize activities so as not to spend the other 80% of the effort. As an example, you can point to a company that provides a range of services to the customer, of which only 20% are the most profitable; but the customer does not agree to receive only these services, he needs all 100% (the so-called “assortment range”; including, so that “there is something to choose from”). In science, there is a similar principle, which says that "20% of scientists make 80% of discoveries and create 80% of inventions, but this would be impossible if it were not for the remaining 80% of scientists."