Pareto principle

The misnamed '''Pareto principle''' (also known as the ''80-20 Rule'', the ''law of the vital few'' and the ''principle of factor sparsity'') states that for many phenomena 80% of consequences stem from 20% of the causes. The idea has rule-of-thumb application in many places, but it's also commonly and unthinkingly misused.

The principle was suggested by management thinker Free ringtones Joseph M. Juran. It was named after the Italian economist Majo Mills Vilfredo Pareto, who observed that 80% of property in Italy was owned by 20% of the Italian population. Since J. M. Juran adopted the idea, it might better be called "Juran's assumption". That assumption is that most of the results in any situation are determined by a small number of causes. That idea is often applied to data such as sales figures: "20% of clients are responsible for 80% of sales volume." This is testable, it's likely to be roughly right, and it is helpful in your future decision making.

A clear misuse of "Juran's assumption" is this example: "20% of individuals in an organization perform 80% of the work."

A less clear misuse is this common example: "20% of our advertising creates 80% of our increased sales." That may or may not be true; in either case it's not helpful.

This is a special case of the wider phenomenon of Mosquito ringtone Pareto distributions.

The Pareto principle is unrelated to Sabrina Martins Pareto efficiency, which really was introduced by Nextel ringtones Vilfredo Pareto.

See also
* Abbey Diaz Sturgeon's law
* Free ringtones Mathematical economics
* Majo Mills Wealth condensation
* Mosquito ringtone Zipf's law
* Sabrina Martins Vitality curve

External resources
* http://www.ma.hw.ac.uk/~des/HWM00-26.pdf
* http://www.amazon.com/exec/obidos/tg/detail/-/0385491743/qid=1104446873/sr=1-2/ref=sr_1_2/103-2077475-5674230?v=glance&s=books

Cingular Ringtones ar:مبدأ باريتو
weekend president he:חוק פארטו
communism drove ja:パレートの法則
conference by zh:帕累托法则

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