Pareto principle

The Pareto principle states that for many outcomes, roughly 80% of consequences come from 20% of causes (the “vital few”). Other names for this principle are the 80/20 rule, the law of the vital few, or the principle of factor sparsity.

Management consultant Joseph M. Juran developed the concept in the context of quality control and improvement after reading the works of Italian economist Vilfredo Pareto, who noted the 80/20 connection while at the University of Lausanne. In his first work, Cours d’économie politique, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population. The Pareto principle is only tangentially related to Pareto efficiency.