In 1906, Italian economist and
sociologist, Vilfredo Pareto
(sometimes misspelled Wilfredo,
Alfredo, or Vilfred) created a
mathematical formula to describe
the uneven income distribution
in Switzerland at that time,
observing that eighty percent of
the wealth was held by a mere
twenty percent of the families.
80/20 Rule Universality
Further empirical studies for
other time periods, for other
countries, produced the stunning
result that they all followed
the same pattern. Later analysis
of distributions in industry and
nature has demonstrated that
80/20 Pareto distributions were
very common in various fields
and not exclusive to income
distribution.
In the late 1940s, in his work,
"The Quality Control Handbook,"
Dr. Joseph M. Juran inaccurately
attributed the discovery of this
uneven weatlh distribution to
Vilfredo Pareto (somtimes
spelled Wilfredo, Vilfred,
Wilfrido, or Alfredo Pareto). It
was actually Joseph Juran's work
which first recognized the
applicability of the Pareto
Principle within the context of
inventory management.
Recognizing and documenting this
universal principle he called
the "vital few and trivial
many", Joseph Juran credited
these findings to Pareto's work
and thus it became known as 'The
Pareto Principle'.
Because Pareto's initial
discovery involved a
distribution of 80% of wealth to
20% of families and it's
inverse, the Pareto Principle is
often called "The 80/20 rule".
The 80/20 Rule means that in
nearly all cases, a few (20
percent) are vital and many (80
percent) are trivial.
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