The 80/20 Rule

Outside academia Pareto is best known for one of his empirical observations. An avid gardener, he noticed that 80 percent of his peas were produced by only 20 percent of the peapods. A careful observer of economic inequalities, be saw that 80 percent of ltaly’s land was owned by only 20 percent of the population.

More recently, Pareto’s Law or Principle, known also as the 80/20 rule, bas been turned into tbe Murpby’s Law of management: 80 percent of profits are produced by only 20 percent of the employees, 80 percent of customer service problems are created by only 20 percent of consumers, 80 percent of decisions are made during 20 percent of meeting time, and so on.

It has morphed into a wide range of other truisms as well: For example, 80 percent of crime is committed by 20 percent of criminals.

Under different guises, the 80/20 rule describes the same phenomenon: ln most cases four fifths of our efforts are largely irrelevant.

Each power law is characterized by a unique exponent, telling us, for example, how many very popular Webpages are out there relative to the less popular ones. As in networks the power law describes the degree distribution; the exponent is often called the degree exponent.

The power law distribution thus forces us to abandon the idea of a scale, or a characteristic node. In a continuous hierarchy there is no single node which we could pick out and claim to be characteristic of all the nodes. There is no intrinsic scale in these networks. This is the reason my research group started to describe networks with powerflaw degree distribution as scale free. With the realization that in most complex networks in nature have a powerflaw degree distribution, the term scale free networks rapidly infiltrated most disciplines faced with complex webs.