Pareto principle

The Pareto principle, named after Vilfredo Pareto (1848-1923), also Pareto effect, 80 -to -20 rule states that 80 % of the results in 20% of the total time of the project are achieved. The remaining 20 % of the results will need 80 % of the time and cause most of the work.

Derivation

The Pareto distribution describes the statistical phenomenon, when a small number of high values ​​of a set of values ​​to more than the total value of contributing to the high number of small values ​​of this quantity.

Vilfredo Pareto studied the distribution of wealth and income in England and found that approximately 20% of families own about 80 % of assets. Banks should therefore take care primarily to those 20 % of people and a lot of their order situation would be assured.

This results in the Pareto Principle is derived. It states that can perform many tasks with a use of funds of about 20% done so that 80 % of all problems are solved. It is often used uncritically for a variety of problems without the applicability is demonstrated in individual cases. However, the " principle " is a good reminder for the values ​​of a calculated for two quantiles Theil Index: This Ungleichverteilungsmaß has in a 50-50 distribution the value " 0". Just over a 80-20 distribution, the value "1". (For a further increase in the direction of a 100 -0- distribution of the Theil index rises theoretically to infinity. )

Note that this division of society into two parts is divided into two "a- fractile " ( see main article percentile).

The distribution of 80 and 20 in the Pareto Principle often leads to the false assumption that the sum of 100 would be mandatory for similar distributions. It would therefore also in the generalization of the principle only those distributions possible in which k percent of success at (100 - k) can be traced back per cent of all efforts. In fact, however, any other distributions are possible in which, for example, 40 percent of efforts lead to 80 percent of the effect. This is readily apparent to the trivial case where 100 percent of the efforts are responsible for 100 percent of success.

Pareto points out that this rule applies only if the elements of the system are independent. Due to interdependence of the elements ( such as in an organization and all socio- technical systems ) the situation is changed. In practice, the number of the relevant elements is therefore very low; very few elements determine almost the entire effect.