The 80/20 rule (Pareto principle) states that 80% of results come from 20% of the work. This useful mental model can help you focus on what adds the most value in your life. It’s a vital concept for managing your time effectively.
The 80/20 Rule (Pareto Principle) Explained
As I mentioned above, the 80/20 rule suggests that 20% of your efforts account for 80% of your results. This principle applies to many areas of your life and understanding it will help you determine what has the biggest impact in reaching your goals.
You can use the rule as an approach to self-improvement. Once you uncover the 20% of your most useful work, you can cut back, phase out, or outsource the remaining 80%. Although, don’t mistake this approach as being lazy. One of the world’s most successful billionaires is often credited with the follow quote…
I choose a lazy person to do a hard job. Because a lazy person will find an easy way to do it. – Bill Gates
The quote doesn’t mean lazy people that cut corners, it’s directed at lazy people who improve and automate processes. And one of the best ways to do that is by auditing your tasks with the 80/20 rule in mind. Many of the successful lazy people then go on to accomplish bigger tasks with their newfound time.
Simply put, the 80/20 rule can help you do more by doing less. You can take the Pareto principle and apply it to almost any situation. You can even see the ratio at work in both the natural and man-made world. I’ll cover some examples below, but first, the rule comes from an unlikely place.
Pareto Principle Origin Story and History
An Italian economist, Vilfredo Pareto, founded the Pareto Principle in 1896. He noted that about 20% of the population in Italy owned about 80% of the land. After expanding his research abroad, he discovered that other countries showed a similar result.
Jumping forward about a century, Joseph Juran repurposed some of Pareto’s ideas. Juran helped popularize some of Pareto’s work. The 80/20 rule now shows up in many fields from around the world.
Another name recently linked to the 80/20 rule is Richard Koch. He authored the book, The 80/20 Principle. The book shows some powerful applications of the principle in business and life.
Here’s a good book rule to live by… if you think you’ll get at least one useful idea from a book, buy it. People pay tens of thousands of dollars on college classes and some students – me being one of them – would argue that they learn more from inexpensive books than many classes.
I created this blog with frugality as a focus. Too many people mistake frugal living with being cheap. Although, there’s a vital distinction between the two. Frugal living doesn’t mean skimping on what’s valuable. Instead, it’s a way to maximize value in your life. And taking time to learn from useful books is a great way to do that.
Examples of the 80/20 Rule in Real Life
The examples below are food for thought and I’m sure they’ll spark some anecdotal examples in your life…
- Nature: Roughly 20% of pea pods produce 80% of the peas (this depends on the type of pea plant and genetically modified peas can deviate).
- Technology: Microsoft learned that 80% of Windows and Office crashes are caused by 20% of the bugs detected.
- Traffic: About 20% of drivers cause 80% of the accidents (I’m looking forward to fully automated cars on the road).
- Crime: In some cities, 20% of the criminals commit 80% of the crime.
- Drinking: Some nights at the bar show that 20% of drinkers consumer 80% of the alcohol.
- Clothing: The average person wears 20% of the clothes in their closet about 80% of the time.
- Grades: Going from a B to an A+ in many classes takes 80% more work than getting to the B.
- Walking: About 20% of a carpet receives 80% of the wear from foot traffic.
- Income: Roughly 80% of world income is produce by the richest 20% of the population.
Please share your examples of the 80/20 rule in the comments below. I’d be happy to add them to my list and give you credit.
80/20 Rule Counter and Conclusion
The Pareto principle is a good rule of thumb. Although, it’s not an end-all-be-all. The 80/20 rule is most effective as you connect and anticipate cause and effect relationships. We’re always trying to get better at connecting the dots. Also, the usefulness of tasks change over time and perceived trivial tasks can have a larger impact than expected.
Another pitfall that can hinder us from optimizing with the 80/20 rule is overconfidence. When we collect more data before making a decision, we tend to become more confident in the decision.
Overall, with the 80/20 rule in mind, it’s important to better determine cause and effect relationships. Then, focus on what you have control over and set a materiality point. Double down your attention and efforts on the most productive work.
P.S. One area I apply the 80/20 rule is with my finances. Frugal living has helped me maximize the value I get out of my purchases. This simple mindset change has helped push me two steps closer to financial independence.