what does Pareto’s law say in simple terms? The theory of the 20 by 80 rule. Examples of applying the method in life

Recent­ly, in psy­chol­o­gy, in eco­nom­ics, in the field of self-devel­op­ment, as well as in oth­er areas of human life, the Pare­to law has gained great pop­u­lar­i­ty. This rule allows a per­son to spend a min­i­mum amount of effort, but get the max­i­mum result. At the same time, this for­mu­la works both in the for­ward and reverse direc­tions, there­fore, often devot­ing a huge amount of time and effort to a par­tic­u­lar task, we get a very small effec­tive return.

What is it and how to apply the rule in real life? How did the Pare­to prin­ci­ple come about? Who is the author of this law? Read more about this in our mate­r­i­al.

The Pare­to prin­ci­ple is a law that will help you estab­lish the lev­el of effec­tive­ness of what you are doing. Often the Pare­to prin­ci­ple is also called the 20/80 rule. If you try to explain the Pare­to law in sim­ple words, then its essence is that 20% of your efforts bring 80% of the result and vice ver­sa: 80% of the efforts give only 20% of the final result. This the­o­ry allows you to give pref­er­ence to the most effec­tive resources that will bring the great­est result, there­by not wast­ing your ener­gy and time. The Pare­to effi­cien­cy sys­tem is very pop­u­lar in psy­chol­o­gy.

The author of this law is an Ital­ian econ­o­mist. He iden­ti­fies sev­er­al sources and modes of man­i­fes­ta­tion of the prin­ci­ple. Let’s con­sid­er some of them:

• This prin­ci­ple has shown itself quite effec­tive­ly in prac­ti­cal work due to the fact that a fair­ly large num­ber of fac­tors are just ordi­naryamong them there are only a few impor­tant for our life;
• a sig­nif­i­cant part of the forces applied to solve the prob­lem does not give us the desired result;
• the vis­i­ble part of life is not always com­pletebecause often there are a large num­ber of details and moments hid­den from a per­son;
• usu­al­ly our plans do not cor­re­spond to real­i­tybecause regard­less of what we planned, in the end, in most cas­es, we get a dif­fer­ent result;
• a large amount of our activ­i­ty does not lead to a direct result, but is just a waste of time.

The 20/80 effect was named after the author of this law, the Ital­ian sci­en­tist Vil­fre­do Pare­to (1848–1923). By his occu­pa­tion, he was an econ­o­mist, so the inven­tion of the for­mu­la was accom­pa­nied by the deriva­tion of coef­fi­cients, the con­struc­tion of graphs and his­tograms. The prin­ci­ple, pop­u­lar to this day, was noticed in the process of study­ing the finan­cial and eco­nom­ic sit­u­a­tion of the inhab­i­tants of Eng­land at that time. In the course of his research, econ­o­mist Vil­fre­do Pare­to noticed that all the coun­try’s mon­ey (as well as oth­er mate­r­i­al goods) among the cit­i­zens of Eng­land is dis­trib­uted rather uneven­ly. More­over, such a bias occurs in such a way that most of the mon­ey is in the pos­ses­sion of a small­er num­ber of peo­ple and vice ver­sa: a small­er amount of mate­r­i­al wealth is dis­trib­uted among the major­i­ty of the peo­ple. Thus, the base ratio is not equiv­a­lent.

If you go into the details of Pare­to’s research, it can be not­ed that he dis­cov­ered 2 main cri­te­ria.

• Only 20% of all mate­r­i­al wealth belongs to 80% of peo­ple, while 10% of the pop­u­la­tion accounts for 65%, and 5% — 50% of wealth. This dis­tri­b­u­tion sug­gests that the coun­try’s eco­nom­ic sys­tem is het­ero­ge­neous.
• The sec­ond cri­te­ri­on, iden­ti­fied by Pare­to, says that such a sit­u­a­tion is typ­i­cal not only for the econ­o­my of Eng­land. The 20/80 prin­ci­ple can be applied in any coun­try and in any giv­en peri­od of time. And also the law is rel­e­vant not only for the econ­o­my, but also for oth­er areas of activ­i­ty.

Based on such a com­plex and large-scale work that was done by the sci­en­tist, a spe­cial graph was mod­eled and built called “indif­fer­ence curves”. The main pur­pose of this graph is to show how many items a per­son can give up in order to buy one well-defined item.

And also Vil­fre­do Pare­to invent­ed an inno­v­a­tive fac­tor that helps deter­mine the lev­el of human well-being. It lies in the fact that in itself an increase in finan­cial and mate­r­i­al wealth is a rather pos­i­tive phe­nom­e­non, since in this case some peo­ple are in gain, but at the same time one can­not call losers. In order to achieve an opti­mal eco­nom­ic (or any oth­er) state, it is nec­es­sary to achieve a sit­u­a­tion where the redis­tri­b­u­tion of mate­r­i­al wealth can improve the con­di­tion of one par­tic­u­lar per­son, but at the same time this fact will not neg­a­tive­ly affect the con­di­tion of anoth­er.

To date, the Pare­to law has been suc­cess­ful­ly used to solve a par­tic­u­lar prob­lem, to make deci­sions in var­i­ous areas of human life: in sales, in man­age­ment, in trade, in time man­age­ment, in the econ­o­my. One way or anoth­er, but the law assumes its unques­tion­ing imple­men­ta­tion. Con­sid­er ways to improve your own life using the Pare­to law.

Learn­ing a new lan­guage is the goal of quite a lot of peo­ple. At the same time, for many, it may seem unat­tain­able, even though knowl­edge of a for­eign lan­guage can advance a per­son both in pro­fes­sion­al and per­son­al life. If we turn to sta­tis­tics, we must under­stand that on aver­age one lan­guage con­tains about 1 mil­lion words. Accord­ing­ly, it is rather dif­fi­cult to study such amount of new infor­ma­tion.

How­ev­er, if we are guid­ed by the Pare­to prin­ci­ple, we can con­clude that knowl­edge of absolute­ly all the words of a par­tic­u­lar lan­guage is not nec­es­sary. It is impor­tant to know only a few hun­dred or thou­sands of basic words that are used more often than oth­ers. Thus, the task of learn­ing a for­eign lan­guage becomes much eas­i­er. And if you mas­ter such a small amount of words (20% of the total), you will be able to com­mu­ni­cate at a fair­ly high lev­el with native speak­ers.

Every­one tries to become the best ver­sion of them­selves: read a lot of books, plan their day cor­rect­ly, suc­cess­ful­ly achieve goals. How­ev­er, we often set impos­si­ble goals for our­selves, and in the course of self-improve­ment attempts, we expe­ri­ence a feel­ing of burnout, as a result, we refuse to achieve goals at all. At the same time, if you know the Pare­to prin­ci­ple and skill­ful­ly apply it, you can avoid such sit­u­a­tions. For exam­ple, Instead of read­ing 10 books a month, set your­self the goal of read­ing just one. Thus, you will get rid of unnec­es­sary stress and gain much more knowl­edge than if you tried to read every­thing at once.

Many peo­ple dream of start­ing to eat right, go on a diet or stop snack­ing late at night, but not every­one suc­ceeds. The whole point is that most peo­ple try to adjust their diet at the same time: give up every­thing sweet, starchy and fat­ty. Such dras­tic mea­sures often cause dis­rup­tions. At the same time, if you wise­ly approach the process of chang­ing your diet, using the Pare­to prin­ci­ple, you can achieve your goal in the short­est pos­si­ble time and with­out much effort. So, you only need to change your diet by 20%.

It is impor­tant to deter­mine which foods you will stop using. So, sup­port­ers of the Paleo diet often refuse dairy and flour prod­ucts, veg­e­tar­i­ans — from meat, you can still refuse sweet or fat­ty, and so on. In this case, you do not have to go on strict and restric­tive detox diets or spend a lot of mon­ey on expen­sive prod­ucts.

The Pare­to prin­ci­ple is also suit­able for those who want to include reg­u­lar exer­cise in their lives. How­ev­er, in order to get in shape, lose weight and build mus­cle mass, it is not nec­es­sary to work out every day, spend mon­ey on sub­scrip­tions to the fit­ness room, and lift heavy weights. Just like with oth­er areas of life, in sports, you need to change only 20% to achieve max­i­mum results. For exam­ple, instead of doing an hour-long dai­ly work­out, you can do a light 20-minute jog.

In this way, with a very small amount of ener­gy and effort, you can get an impres­sive result. At the same time, sports are rec­om­mend­ed to be com­bined with a revi­sion of your diet accord­ing to the prin­ci­ple described above.

Start­ing your own busi­ness is a rather dif­fi­cult task that requires a lot of time, mon­ey, ener­gy and per­son­al effort. How­ev­er, even giv­ing all the best at 100%, it is far from always pos­si­ble to notice the desired result. That is why expe­ri­enced busi­ness­men advise begin­ners to pay atten­tion to the Pare­to law, which is becom­ing more and more pop­u­lar in the busi­ness sphere.

If you fol­low all his prin­ci­ples, then to get 80% of the result you will need to make only 20% of the effort and vice ver­sa: 80% of your efforts will bring you only 20% of the result. Using the Pare­to law, you will save your­self from unnec­es­sary work, respec­tive­ly, from unnec­es­sary stress, and free up a lot of time for things that bring you plea­sure (hob­bies and hob­bies, recre­ation, com­mu­ni­ca­tion with fam­i­ly, walks with friends, trav­el).

Entre­pre­neurs who have already applied the Pare­to law in busi­ness report great suc­cess. So, only 20% of leads bring 80% of sales and only 20% of con­tent bring 80% of traf­fic to the site. Pare­to’s law is applic­a­ble in many areas of human life. It is very pop­u­lar among those peo­ple who want to increase their effi­cien­cy and pro­duc­tiv­i­ty, while not spend­ing a lot of effort and ener­gy.

The most basic dif­fi­cul­ty in the process of using the Pare­to prin­ci­ple is the deter­mi­na­tion of those very 20% of cas­es that will lead to 80% of the result. For exam­ple, if you run your own blog and are try­ing to attract a large num­ber of vis­i­tors to your site, then the ques­tion remains which 20% of top­ics should be giv­en max­i­mum atten­tion, and which issues can be exclud­ed from cov­er­age. If you apply the rule in sports, then how do you know which exer­cis­es will make your body stronger and more mus­cu­lar: squats, push-ups or pull-ups?

Unfor­tu­nate­ly, nei­ther the Ital­ian econ­o­mist Vil­fre­do Pare­to nor the for­mu­la invent­ed by him give a direct and under­stand­able answer to this ques­tion. It turns out that the appli­ca­tion of the Pare­to law is a kind of roulette, since you can under­stand its effec­tive­ness only by tri­al and error. At the same time, it is impor­tant to think over all your steps in advance and strate­gi­cal­ly plan your plan of action. This is espe­cial­ly true for those peo­ple who plan to apply the prin­ci­ple in the process of devel­op­ing their own busi­ness.

Despite the fact that the Pare­to prin­ci­ple is very pop­u­lar, and has already proved its effec­tive­ness and verac­i­ty more than once, there are still skep­tics who do not believe in the oper­a­tion of the the­o­rem. Let’s talk about whether there can be such a sit­u­a­tion when the Pare­to prin­ci­ple will not work.

With­out fur­ther ado, let’s say right away that such a sit­u­a­tion can arise, and in some cas­es the Pare­to prin­ci­ple will not work. But this fact in no way dimin­ish­es the impor­tance of the dis­cov­ery of the Ital­ian econ­o­mist or its sig­nif­i­cance. The thing is that even despite the fact that the Pare­to prin­ci­ple applies to all areas of human life, it will not always act absolute­ly iden­ti­cal. For exam­ple, dif­fer­ences can be observed in busi­ness, sports, self-devel­op­ment. In this regard, when plan­ning their actions, sci­en­tists advise not only to be guid­ed by the Pare­to prin­ci­ple, but also to take into account oth­er, more tan­gi­ble data (for exam­ple, sta­tis­ti­cal infor­ma­tion).

By itself, the Pare­to law is a rather con­tro­ver­sial and con­tro­ver­sial the­o­rem. On the one hand, there are a large num­ber of those peo­ple who assure that the for­mu­la real­ly works and can lead you to the best pos­si­ble result. How­ev­er, on the oth­er hand, very often one can come across opin­ions that the Pare­to law is real non­sense and fic­tion, that it is not applic­a­ble in real life.