What is the Pareto principle and where does it apply?

Recently, in psychology, in economics, in the field of self-development, as well as in other areas of human life, Pareto's law has gained great popularity. This rule allows a person to spend the minimum amount of effort, but get the maximum result. At the same time, the specified formula works both in the forward and in the opposite direction, therefore, often devoting a huge amount of time and effort to a particular task, we get a very small effective return.

What is it and how to apply the rule in real life? How did the Pareto principle come about? Who is the author of this law? Read more about this in our material.

The Pareto Principle is a law that will help you establish the level of effectiveness of what you do. Often the Pareto principle is also called the 20 to 80 rule. If you try to explain the Pareto law in simple terms, then its essence is that 20% of the efforts you spend bring 80% of the result and vice versa: 80% of the efforts give only 20% of the final result. This theory allows you to give preference to the most efficient resources that will bring the greatest results, thereby not wasting your energy and time. The Pareto efficiency system is very popular in psychology.

The author of this law is an Italian economist. He identifies several sources and ways of manifestation of the principle. Let's consider some of them:

• this principle proved to be quite effective in practical work due to the fact that quite a few factors are just common, among them there are only a few that are important for our life;
• a significant part of the forces applied to the solution of the problem does not give us the desired result;
• the visible part of life is not always complete, because often there are a large number of details and moments hidden from a person;
• usually our plans do not correspond to reality, because regardless of what we have planned, as a result, in most cases, we get a different result;
• a large volume of our active activity does not lead to a direct result, but is just a waste of time.

The 20 to 80 effect was named after the author of this law, the Italian scientist Vilfredo Pareto (1848-1923). By his occupation, he was an economist, so the invention of the formula was accompanied by the derivation of coefficients, the construction of graphs and histograms. The principle, popular to this day, was noticed in the process of researching the financial and economic situation of the inhabitants of England at that time. In the course of his research, the economist Vilfredo Pareto noticed that all the country's money (as well as other material goods) is rather unevenly distributed among the citizens of England. Moreover, such a skew arises in such a way that most of the money is in the possession of fewer people and vice versa: less material wealth is distributed among the majority of the people. Thus, the base ratio is not equivalent.

If you go into the details of Pareto's research, then it can be noted that he discovered 2 main criteria.

• Only 20% of all material wealth belongs to 80% of people, while 10% of the population accounts for 65%, and 5% - 50% of material wealth... This distribution suggests that the country's economic system is heterogeneous.
• The second criterion, identified by Pareto, states that this situation is typical not only for the English economy. The 20 by 80 principle can be applied in any country and at any given time. And also the law is relevant not only for the economy, but also for other areas of activity.

Based on such a complex and large-scale work that was done by the scientist, a special graph was modeled and built called Indifference curves. The main purpose of this graph is to display how many products a person can refuse to buy one well-defined product.

And also Vilfredo Pareto invented an innovative factor that helps determine the level of human well-being. It lies in the fact that in itself an increase in financial and material wealth is a rather positive phenomenon, since in this case some of the people are in the winners, but at the same time it is impossible to name the losers. In order to achieve an optimal economic (or any other) state, it is necessary to achieve a situation where the redistribution of material goods allows improving the state of one particular person, but at the same time, this fact will not negatively affect the state of another.

Today, Pareto's law is successfully used to solve a particular problem, to make decisions in various areas of human life: in sales, in management, in trade, in time management, in the economy. One way or another, but the law presupposes its unquestioning fulfillment. Consider ways to improve your own life using Pareto's law.

Learning a new language is the goal of a fairly large number of people. At the same time, for many, it may seem unattainable, even despite the fact that knowledge of a foreign language can advance a person both in professional and personal life. If we turn to statistics, we must understand that, on average, one language contains about 1 million words. Accordingly, it is quite difficult to study this amount of new information.

However, if we are guided by the Pareto principle, then we can conclude that knowledge of absolutely all words of a particular language is not at all necessary. It is important to know only a few hundred or thousands of basic words that are used most often. Thus, the task of learning a foreign language becomes much easier. And if you master such a small volume of words (20% of the total), you will be able to communicate at a fairly high level with native speakers.

Each person tries to become the best version of himself: read a lot of books, plan his day correctly, successfully achieve goals. However, we often set ourselves impossible tasks for ourselves and in the course of attempts at self-improvement we experience a feeling of burnout, as a result we refuse to achieve goals altogether. At the same time, if you know the Pareto principle and skillfully apply it, then you can avoid such situations. For example, instead of reading 10 books a month, set yourself the goal of reading just one. Thus, you will get rid of unnecessary stress and gain much more knowledge than if you were trying to read everything at once.

Many dream of starting to eat right, go on a diet or stop snacking late at night, but not everyone succeeds. The thing is that most of the people are trying to establish their meals at the same time: give up everything sweet, starchy and fatty. Such drastic measures often cause disruptions. At the same time, if you wisely approach the process of changing your diet, using the Pareto principle, then you can achieve your goal in the shortest possible time and without much effort. So, you only need to change your diet by only 20%.

In doing so, it is important to determine which foods you will stop using. So, supporters of the paleo diet often refuse dairy and flour products, vegetarians - from meat, you can still refuse sweet or fatty foods, and so on. And you don't have to go on strict and restrictive detox diets or spend a lot of money on expensive foods.

The Pareto principle is also suitable for those who dream of including regular sports in their lives. However, in order to get in shape, lose weight and build muscle, you don't have to exercise every day, spend money on gym membership, or lift heavy weights. Just like with the rest of life, in sports, only 20% needs to be changed in order to achieve maximum results. For example, instead of doing an hour-long daily workout, you can do a light jog for 20 minutes.

Thus, spending a very small amount of energy and effort, you can get an impressive result... At the same time, it is recommended to combine sports activities with a revision of your diet according to the principle described above.

Starting your own business is a difficult task that requires a lot of time, money, energy and personal effort. However, even giving your all 100%, it is far from always possible to notice the desired result. That is why experienced businessmen advise beginners to pay attention to the increasingly popular Pareto law in the business field.

If you follow all its principles, then to get 80% of the result, you will need to make only 20% of the effort and vice versa: 80% of the effort will bring you only 20% of the result. Using the Pareto law, you will save yourself from unnecessary work, respectively, from unnecessary stress, and free up a large amount of time for activities that bring you pleasure (hobbies and hobbies, recreation, communication with family, walking with friends, travel).

Entrepreneurs who have already applied Pareto's Law in business report great success. So, only 20% of leads bring 80% of sales and only 20% of content brings 80% of traffic to the site. Pareto's Law is applicable in many areas of human life. It is very popular among those people who dream of increasing their efficiency and productivity, while not spending a lot of effort and energy.

The most basic difficulty in the process of using the Pareto principle is determining the very 20% of cases that will lead to 80% of the result. For example, if you run your own blog and strive to attract a large number of visitors to your site, then the question remains about which 20% of topics should be given maximum attention, and which issues can be discarded. If you apply the rule in sports, then how do you know which exercises will make your body stronger and more muscular: squats, push-ups or pull-ups?

Unfortunately, neither the Italian economist Vilfredo Pareto, nor the formula he invented, provide a direct and understandable answer to this question. It turns out that the application of the Pareto law is a kind of roulette, since you can only understand its effectiveness by trial and error... At the same time, it is important to think over all your steps in advance and strategically plan your action plan. This is especially true for those people who plan to apply the principle in the process of developing their own business.

Despite the fact that the Pareto principle is very popular, and has already managed to prove its effectiveness and truthfulness more than once, there are still skeptics who do not believe in the operation of the theorem. Let's talk about whether a situation can arise where the Pareto principle will not work.

Without further ado, let's say right away that such a situation may arise, and in some cases the Pareto principle will not work. But this fact in no way diminishes the importance of the discovery of the Italian economist or its significance. The fact is that even despite the fact that the Pareto principle is applicable to all areas of human life, it will not always act in exactly the same way. For example, differences can be observed in business, sports, and self-development. In this regard, when planning their actions, scientists advise to be guided not only by the Pareto principle, but also to take into account other, more tangible data (for example, statistical information).

By itself, Pareto's law is a rather controversial and controversial theorem. On the one hand, there are a large number of those people who claim that the formula really works and can lead you to the best possible result. However, on the other hand, one can very often come across opinions that the Pareto law is a real nonsense and an invention, that it is not applicable in real life.