The Pareto Principle — 80:20 Rule

The Pareto Principle states that for many outcomes, roughly 80% of consequences come from 20% of the causes.

Vilfredo Pareto, in his first work Cours d'économie politique, noted that roughly 80% of land in Italy was owned by 20% of the population. Since then, the same ratio has been observed in many areas — economics, computing, sports, and more.

Let's look at some of these areas where the Pareto Principle shows up:

In Economics

• In 1992, a United Nations Development Program Report showed that the richest 20% of the world's population generated 82.7% of the world's income.
• In 2000, 2006, and 2018, the top 20% of earners in the US paid roughly 80–90% of federal income taxes.
• 20% of products account for roughly 80% of sales value for many businesses.
• 20% of customers have been shown to be responsible for almost 80% of an organization's profits.

In Computing

• Microsoft noted that by fixing the top 20% of the most reported bugs, 80% of related errors and crashes in a given system would be eliminated.
• Lowell Arthur put it simply: "20% of the code has 80% of the errors. Find them, fix them!"
• In general, 80% of certain pieces of software can be written in 20% of the time. Conversely, the hardest 20% of the code takes 80% of the time.
• People use 20% of a program's features 80% of the time.

In Other Fields

• 80% of results come from the efforts of 20% of employees.
• 80% of the value is achieved with the first 20% of the effort.
• 80% of traffic comes from 20% of posts.

The Pareto Principle shows up in day-to-day life as well. For example, we often spend 80% of our time with 20% of our friends.