Pareto

Pareto refers to a surname of Italian origin, most closely associated with Vilfredo Pareto (1848–1923), an engineer, sociologist, and economist whose work spanned economics, sociology, and welfare analysis. His studies on income and wealth distribution inspired concepts that are widely used across disciplines.

The Pareto principle, also known as the 80/20 rule, observes that in many systems a small share of causes accounts for a large share of effects. For example, a minority of inputs or activities often drives the majority of outcomes. While it is a useful heuristic in management, quality control, and policy, it is not a universal law and does not specify precise percentages in every situation.

Pareto efficiency, or Pareto optimality, is a state of allocation where no individual can be made better off without making someone else worse off. It is a fundamental criterion in welfare economics and mechanism design, emphasizing efficiency rather than equity. An improvement is a Pareto improvement if at least one person benefits and none are harmed.

The Pareto distribution is a heavy-tailed probability distribution used to model phenomena such as wealth and firm or city sizes. It characterizes systems where many small values coexist with a few very large ones, following a power-law pattern.

In optimization and decision analysis, the Pareto frontier (or Pareto set) comprises solutions that are non-dominated: improving one criterion would worsen at least one other. In quality control, a Pareto chart ranks factors by their frequency or impact, highlighting the most significant causes.

Overall, Pareto concepts provide lenses for efficiency, inequality, and prioritization in economics, statistics, and operations research.