We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is Pareto's Law?

By Christian Petersen
Updated May 21, 2024
Our promise to you
All The Science is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At All The Science, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Pareto's law, sometimes known as Pareto's principle, was originally applied to economics by Vilfredo Pareto, an Italian economist who lived in the 19th century. Also known as the 80/20 rule, as it is used today, it states that 80% of results stem from 20% of causative influences. As applied to business and economics, it implies that a majority of profits come from a small minority of customers. Pareto also held that this idea could be applied to other situations as well.

Application of this principle affects the way many modern companies do business. A fundamental result of following Pareto's law is that the best customers get the most attention and best service and that the remainder are relatively unimportant. Of course, the principle does not dictate that these less valuable customers be ignored but simply that they receive a minimum of attention compared to the most important customers.

While the popular usage of the principle has become known as the 80/20 rule, the original law was expressed as a mathematical equation that Pareto developed to describe the way control of wealth is distributed. He postulated that this equation, log N = log A + m log x could be applied to any economic system to show the relative distribution of wealth. The variables N and x represent those with more wealth and influence and those with lesser wealth and influence, respectively. A and m are constants that depend on the particular system. Numerous studies of his work and applications of his equation have proven that it is historically very accurate.

Over time, in an effort to find a simpler way to describe Pareto's law, economists began to refer to it as the 80/20 principle as this was the ratio that seemed to bear out his postulation. Of course, the 80/20 distribution was not necessarily a definitive value for the ratio but rather a generalization to illustrate his point.

Today, Pareto's law is applied as a general principle in many ways that deviate from his original theory about the distribution of wealth. The general principle of small groups producing large results in economics has broadened to the belief that the 80/20 principle of proportional distribution has examples in almost any system, including socioeconomic, ecological, and other scientific settings. For example, many studies have shown that a majority of crimes are committed by a small group of criminals. In software and computer systems, a small number of bugs cause most of the crashes and other problems. When analyzing crop losses, it is normal for a few pests out of many to be the cause of most of the damage.

All The Science is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
All The Science, in your inbox

Our latest articles, guides, and more, delivered daily.

All The Science, in your inbox

Our latest articles, guides, and more, delivered daily.