The Italian economist and sociologist Vilfredo Frederico Damaso Pareto argues that 80% of the land in Italy is owned by 20% of the population. While studying wealth and income distribution in the British economy, he sees that 80% of the wealth belongs to 20% of the population. Joseph Juran, who wrote very important works in the field of quality management, says that 80% of the effects are caused by 20% of the factors. He calls this the Pareto Principle.
The emergence of the Pareto Principle is based on economics. But in reality, do we see this principle only in economics? Of course not. We encounter this principle in many areas of our lives. For example, we spend about 80% of our time with 20% of our circle of friends. According to some studies, 80% of traffic accidents are caused by 20% of drivers. This ratio does not necessarily have to be between 80 and 20. If I need to give an example, which is given with different figures that comply with this principle, 86% of the world’s wealth is in the hands of 8% of the society.
Pareto Principle in Economics
The analysis made by Vilfredo Pareto was valid for almost many countries. For example, when we examine the 10 richest people in the world, the sum of the wealth of the first 3 people is as much as the sum of the wealth of the other 7 people.
We can relate this principle to Marginal Utility. The first workers who join the production during a production will contribute much more. Imagine you are doing a business on your own. All the resulting product is your work. Also, imagine doing the same job with a team of 200 people. In this case, you will have a contribution of 1 in 200. Considering this, we can say that as the number of workers increases over time, the amount of product produced cannot increase as quickly as before.
Work Less But Efficiently
Almost from our first years, we have been educated in many fields, wondering whether it is this or that. In the trainings we have seen, we have learned too many things that may not be useful for us at any point in our lives. What does the Pareto Principle have to do with these? Think about the days you studied for exams in your high school or college years. Sometimes one works so hard as if he could not sleep for days and learn all the subjects like floods. For example, he learns 90 pages of a book for which he is responsible for 100 pages very well. But he doesn’t pay much attention to the remaining 10 pages. When the exam time comes, he sees that most of the questions come from that 10-page section.
It can be hard to see that 10-page section. However, it is not impossible. By using your own experiences and suggestions from people whose opinions you care about, you can find the places you need to focus on. Take care to spend your time on creative and productive work.
Do not be afraid to set new goals for yourself. But remember that you need to take firm steps when setting your goals. Try to analyze risks and problems well. Focus on the things that cause you the most trouble. If you can solve those problems, you will have solved about 80% of your problems.
If you want to learn more about the Pareto Principle:
Finding the right minority:
The secret of successful people to be more productive:
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