From the distribution of wealth to the amount of affection we get, one powerful principle seems to be a natural governing force.
The Pareto Principle, or the 80/20 rule, states that roughly 80% of effects are derived from 20% of causes. The rule applies throughout a vast swath of environments, in fields as diverse as health and safety, criminology and business.
While the 80/20 rule continues to be found apparent in an increasing number of facets of life—even love and relationships—its most pertinent application remains in the field from which it was derived, economics.
The origin of the Pareto Principle dates back to 1906. Italian engineer and economist Vilfredo Pareto’s research indicated that 80% of the land in Italy was owned by 20% of the population.
Intrigued by his discovery, Pareto conducted further research in a small group of other countries, with his findings proving overwhelmingly similar. A keen amateur gardener, Pareto began discovering that his theory also held true in all sorts of other contexts, including the revelation that 20% of the pea pods in his garden produced 80% of the peas.
While Pareto’s work did not go unnoticed, the term “The Pareto Principle” was not actually coined until the 1940s by American Engineer Joseph Juran. Upon noticing that 80% of the quality problems in industrial mass-production systems came from 20% of the possible causes, and after stumbling across Pareto’s work quite by accident, Juran named the term after Pareto, spawning an exponential growth and interest in his work.
While Pareto’s observations as early as 1906 indicated that there was an uneven distribution of wealth within countries, the explosion of globalisation, which has occurred over the last half Century or more, has only served to accentuate the uneven pattern of wealth distribution, on a global scale.
As the economies, industrial development, markets, cultures and policies of the world have become more integrated, so the distribution of wealth and development has become increasingly aligned with the 80/20 rule.
Indeed, the 1992 United Nations Development Program Report was the first report to illustrate this trend; it highlighted that, between 1960 and 1989, the countries with the richest 20% of world population increased their share of global Gross National Product (GNP) from 70.2% to 82.7%.
In 80/20 situations, the minority seems to reign over the majority. Mathematicians refer to such a pattern as a “power law” distribution, and it stands in contrast to the idea of a “normal” distribution, where what’s “average” dominates.
When one begins to look for such patterns, they seem to appear almost everywhere. The implication is that although the 80/20 rule may be a 20th century construct, it could very well be a key to how natural order has been achieved, on both a macro and micro scale, ever since the beginnings of evolution and “survival of the fittest.”
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