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This is also broadly in line with the world population table above, where the second 20% control 12% of the wealth, and the bottom of the top 20% (presumably) control 16% of the wealth.The term 80/20 is only a shorthand for the general principle at work.It is the basis for the Pareto chart, one of the key tools used in total quality control and Six Sigma techniques.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.In the systems science discipline, Epstein and Axtell created an agent-based simulation model called Sugar Scape, 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 collective consequence of these individual rules.

Aside from ensuring efficient accident prevention practices, the Pareto principle also ensures hazards are addressed in an economical order as the technique ensures the resources used are best used to prevent the most accidents.The idea has a rule of thumb application in many places, but it is commonly misused.For example, it is a misuse to state a solution to a problem "fits the 80/20 rule" just because it fits 80% of the cases; it must also be that the solution requires only 20% of the resources that would be needed to solve all cases.In individual cases, the distribution could just as well be, say, nearer to 80/10 or 80/30.There is no need for the two numbers to add up to the number 100, as they are measures of different things, (e.g., 'number of customers' vs 'amount spent').




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