Have you ever noticed that even though you have a wardrobe full of clothes, you tend to wear just a few outfits most of the time? Do just a small amount of school subjects cause most of your worry? Do you argue with your family about the same small number of things most of the time? If not, congratulations, you are an exceptional individual! If yes, congratulations also. You are like the rest of us normlings who find ourselves unknowingly conforming to one of the most fundamental (and easy to apply to daily life) economic rules: “The Pareto Principle” aka “The 80:20 Rule”.
A few facts (brought to you by google) on the Italian stallion himself Mr. Vilfredo Pareto (5 July 1848 – 19 August 1923):
- He was an engineer, sociologist, economist, political scientist, and philosopher (and a show-off)
- In 1906 he noticed that rich people in Italy (roughly 20% of the population) owned the majority (roughly 80%) of the property.
- He liked cats
Although Mr. Pareto was a pretty controversial fellow (he was more than a tad fascist), for many he is considered the Godfather of modern economics as he used a more scientific/mathematical analysis in his work as opposed to the moral philosophy from the likes of Adam Smith (the Charles Darwin of economics). And with that analysis came something known as the 80:20 rule. Some daily life examples would be:
- We wear 20% of our clothes 80% of the time
- 80% of our worries come from 20% of our problems
- 20% of the issues in a house (who is doing the dishes/walking the dog/not taking their shoes off?) cause 80% of the arguments
Some economic examples meanwhile are:
- 20% of workers create 80% of the output
- 80% of sales come from 20% of the customers
- 20% of the customers account for 80% of the complaints
Obviously if we were to apply measurement to each of these examples it is unlikely that they would amount to 80:20 exactly. The importance though lies in the recognition that of all the things flooding our way each day, some are much more important/time-consuming to us than others. If we consider that we are afforded a certain amount of time currency each day for work and leisure, one might assume that the rational human (although I’ve yet to meet one) would aim to spend that time on things that would reap maximum reward over the course of their day and ultimately their life times.
So, on the odd day that we might be feeling somewhat rational, we might want to look at the day ahead and think about spending our time quids wisely. In work, identify the tasks that are most essential to meeting our goals – prioritise them as opposed to figuring out how to make titles in our powerpoint presentation spin across the page. We might find time for that joy later when all the real stuff is done.
In school, if Maths gives us the most stress, then for this class let’s try not get distracted by the length of the teacher’s nose hair so we don’t need to spend the rest of the week worrying about whose homework we are going to try to copy.
And at home, if we know we are likely to spend a long time fighting about who put the mud on the carpet, then let’s take our shoes off straight away and win ourselves some time pounds back to spend on the things we like.
It all sounds very simple. It isn’t. It takes practice. I’ll have another bash tomorrow. It probably won’t be completely successful. But at least for this day I’ll be counting my time pounds and wondering if they are being well spent.