The 3 Expenses that Matter Most

Back in 1906, an Italian economist named Vilfredo Pareto noticed that just 20% of the population of Italy owned 80% of the land. That makes sense. Few people are rich, and they're the ones who own most of the stuff. So, Romanian-American management consultant Joseph Juran developed the concept further, by observing that 80% of results come from 20% of causes . For example: In 1988, the New York Times reported that about 80% of video rental revenues came from just 20% of the stock. Microsoft has noted that 80% of crashes can be prevented by fixing 20% of the most-reported errors. 20% of the best professional baseball players account for 80% of total wins. Studies show that approximately 80% of healthcare expenses accrue to 20% of patients. The frequency of words used in most languages, the size of cities, the magnitude of earthquakes, and even the intensity of solar flares all follow similar distributions. If the Pareto Principle, or the 80/20 rule, shows up in so many...