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Tuesday, February 8, 2011

The Pareto Principle

Back in 1906, an Italian economist called Vilfredo Pareto observed that 80% of the peas in his garden came from 20% of the pea pods.  From there he extrapolated that 20% of the Italian population held 80% of the land. This observation became known as the Pareto Principle which roughly states that in many cases, 80% of the effects arises from 20% of the causes.  This is also known as the 80-20 Rule.

Applied to business, it can be observed that 80% of a typical company's sales revenues come from 20% of its clients.  In software optimization, Microsoft purportedly noted that 80% of crashes and errors could be cured by fixing the top 20% of reported bugs. Likewise criminal science reports that 80% of crime is committed by 20% of criminals.  It is important to note that the proportion between cause and effect does not need to add up to 100.  It could easily be 80-30. The point is a majority of the effects experienced is caused by a minority of sources.

Does this hold true with life?

The family we were born into, the spouse we marry and where we choose to live probably do more to affect our lives than all other decisions put together.  Think about the monthly email traffic coming into your inbox. Chances are 80% of your email correspondence is from 20% of your contacts (excluding solicitation emails).   How about mobile phone conversations?  80% of our calls come from 20% of the people in our address books?

Diet wise, I advocate eliminating sugar and wheat.  Avoiding those two items alone will produce a large portion of the benefits.  Avoiding refined carbohydrates is one of the keys. Next is getting adequate sleep in a dark room (use dark curtains and turn the clock away from you). If that's not possible, wear an eye patch to sleep. Walk a lot and stay active.  These items comprise the 20% from which we will experience 80% of results.

Pareto's Principle is liberating in that it only requires the right combination of minority actions to obtain 80% of desired results.

These are the 20% of my inputs which determine 80% of my results.  What 20% comprise yours?


Reading for Extra Credits
Because the Pareto Principle is based on an observation in nature, it shares traits with Kepler's Third law of Planetary Motion, Kleiber's Law on animal metabolism, inverse-square laws of Newtonian Gravity and fractals.  Since metabolic networks in organisms share recursive features subject to the same behavior as Power Laws which describe mature, self-organizing complex systems, what should our diet and energy expenditures look like?

Art De Vany describes Power Law exercise in the following manner:

"A power law distribution of activities means the intensity; spacing, duration and volume of training are variable in order to present a constant novelty in metabolic challenges while retaining enough structure and repetitiveness to maximize adaptive capability. When you train like a hunter, you follow a power law distribution of intensity and frequency. You distribute activities so that you hit highly intense metabolic peaks briefly and intermittently."

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