Other Applications
In the systems science discipline, Epstein and Axtell created an agent-based simulation model called SugarScape, from a decentralized modeling approach, based on individual behavior rules defined for each agent in the economy. Wealth distribution and Pareto's 80/20 principle became emergent in their results, which suggests the principle is a natural phenomenon.
The Pareto principle has many applications in quality control. It is the basis for the Pareto chart, one of the key tools used in total quality control and six sigma. The Pareto principle serves as a baseline for ABC-analysis and XYZ-analysis, widely used in logistics and procurement for the purpose of optimizing stock of goods, as well as costs of keeping and replenishing that stock.
The Pareto principle was a prominent part of the 2007 The 4-Hour Workweek by Tim Ferriss. Ferriss recommended focusing one's attention on those 20% of customers who contribute 80% of the income. More notably, he also recommends 'firing' – refusing to do business with – those 20% of customers who take up the majority of one's time and cause the most trouble.
In health care in the United States, 20% of patients have been found to use 80% of health care resources.
Several criminology studies have found 80% of crimes are committed by 20% of criminals.
Drawing on several sources including the study of rats in crowded environments and communist management of American POWs in the Korean War, the writer Colin Wilson ascertained that 20% of humans are "power men", suited to governing (and, often, exploiting) the other 80% of humanity.
In the financial services industry, this concept is known as profit risk, where 20% or fewer of a company's customers are generating positive income, while 80% or more are costing the company money.
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