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Vilfredo Pareto

Vilfredo-Pareto

Vilfredo Pareto (July 15, 1848 to August 19, 1923) was an Italian thinker who practiced in many disciplines. He was an engineer and philosopher, but he is most well-known for his work in economics.

It was his work in that field that led to the development of one of the most commonly used tools in continuous improvement. In his study on the distribution of land ownership, he observed that a small percentage of people owned the vast majority of reap property. In fact, he was able to come up with a mathematical formula that quantifies this distribution. It is notable that while his formula is an estimate, it has proven to be close to actual observed data on wealth.

The practical application of this formula is known as the Pareto Principle or the 80-20 Rule. This rule essentially says that 80 percent of all outcomes are the result of just 20 percent of the types of problems. That 20 percent is often referred to as the “critical few”. This distribution is most commonly displayed on a Pareto Chart.

 

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