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.