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What is Pareto? Vilfredo Pareto (1848-1923) was an Italian economist who discovered the 80/20 rule. Born in Paris to Italian exiles, he graduated from the Polytechnic Institute of Turin in 1869. In 1893 he became chair of economics at the University of Lausanne. In 1906 Pareto published Manual of Political Economy in which he observed that twenty percent of the Italian people owned eighty percent of their country's accumulated wealth. After studying such distributions in many other places, Pareto came to believe that this 80/20 proportion was nearly universal. Other researchers found that the 80/20 rule seemed to apply to many other situations. For example: you can paint 80% of the wall surface in a room in 20% of the time it takes to paint the whole room, or 20% of the quality problems account for 80% of the rejects. This is only a rule of thumb since actual proportions are rarely exactly 20% and 80%, but there usually are “the vital few and the trivial many.” Pareto’s Principle is that to maximize results, you should concentrate your effort on the vital few (the 20%) rather than the trivial many (the other 80%). A simple rank ordered list of the incidence of categorized case is often sufficient. A Pareto Diagram (i.e. a bar chart) can frequently highlight the urgency of working on the 20%. For example, this rank ordered list of failures:
Can be represented by this Pareto Diagram: Although the table and the chart represent the same data (actually the table has more data), the data in the chart can be absorbed more quickly. A quick look should persuade anyone that focusing effort on solving the flash duration problem will eliminate many more failures than getting better control of the aperture. |
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