What is the 80/20 theory?


I find the 80/20 rule to be very useful and applicable to many situations I run into. A friend once told me who came up with this concept and the name of the book he wrote on the subject, but I have forgotten them both and would like to check them out at the library. Can you enlighten us with a little background and history of the man and the concept?

-- Rick, Encinitas

Funny you should bring it up. In our most recent press conference, the Ma & Pa Alice Institution for Figuring Things Out announced that three out of four people who write to us provide 75 percent of our questions. I'd suspected it all along, but it's nice to have the pencil-pushers confirm it.

But if you're not from the M&PAIFTO, then the 80/20 Rule says that in general, 20 percent of A accounts for 80 percent of B. Twenty percent of customers account for 80 percent of sales; 20 percent of criminals account for 80 percent of crime; 20 percent of a product line accounts for 80 percent of revenues. Identify that significant 20 percent and use it to best advantage and you will be richer or more efficient or happier or something else good. The rule seems to suggest that 80 percent of life is a complete waste of time.

Actually, the guy who started all this was Italian economist Vilfredo Pareto. In the late 1890s, he was fiddling around with patterns of income distribution across various eras and populations and discovered a consistent mathematical relationship between wealth and the number of people who enjoy that wealth. To wit, 20 percent of people in any given population had 80 percent of all the good stuff; and the remaining 20 percent was divided along a predictable distribution curve, with most of us scrabbling around at the bottom fighting for scraps. Mussolini got ahold of Pareto's work and turned it into Fascism.

In the 1950s, the idea was revived and applied to a range of situations in which it was found that a minority of the effort or input or things produces a majority of the results. It's also known as the Rule of the Vital Few, the Principle of Least Effort, and the Principle of Imbalance. The numbers 80 and 20 aren't sacred. The general principle is that if you apply statistics to data related to causes/input/resources/effort and output/results/etc., you'll find some kind of imbalance between the two. F'rinstance, a study of 300 American films showed that 4 of them, less than 2 percent, earned 80 percent of the total box office take for the group. Well, we didn't really need Pareto to tell us that most of Hollywood is a waste.

It's also been suggested that each person apply the principle to his/her own puny life. If we can identify the small fraction of activities or efforts that produces most of our satisfaction/wealth/happiness/whatever, we can adjust our lifestyles accordingly.

As for books, the one that kicked off American interest in Pareto was a 1950s tome, the bible of the quality control industry, The Quality Control Handbook, by Joseph Moses Juran, an engineer with Bell Labs. Slogging through that would probably be a perfect example of 80 percent of your effort being a waste. And now I gotta go identify the 80 percent of the elves that are freeloading slackers.

* * *

80/20 Update

If you can remember back three, four weeks, you might be interested in this newsbit from regular listener Susan Newell in re: the book that made the 80/20 Rule a household name...a question from Rick in Encinitas. Susan suggests Rick was looking for How to Get Control of Your Time and Your Life by Alan Lakein. Sez Susan, the author makes liberal use of the 80/20 concept (20 percent of your efforts produce 80 percent of your results) as he instructs you in how to -- finally, once and for all, no screwing around, and this time I really really mean it! -- wrestle your life into submission. With this book in hand, we expect that Rick will soon be so perfect he'll never have to write to us again. One more tip, Rick. Don't bother looking for the book in the central library downtown. In what we've voted our Irony of the Month, whoever checked it out hasn't managed to get it back by the due date, despite Mr. Lakein's bookful o' tips.

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