RULES FOR REALISTS: Rule #3

Rules for Realists #3: The World is Unevenly Distributed

The Pareto Principle, also known as the 80/20 Rule, states that, despite appearances, all things are not equal and that a general rule of imbalance can be statistically proven.

In other words, a constant minority of some aspect of life will have the majority of that aspect's effect. This majority/minority distribution works out (over the long run) to 80%/20%.

For example, 80% of a given city's traffic jams occur will occur on 20% of its streets and highways. 80% of those traffic jams will occur during 20% of a 24 hour day. 80% of crime will be committed by 20% of the population. 80% of crime will be committed by 20% of the age spectrum of a population. 80% of a company's workforce benefit will come from 20% of that workforce.

These ideas are not new but they tend to be forgotten especially in today's world where modern technology gives the illusion that everything is modular and precisely duplicated.

Realists can use Rule #3 to many ways. One popular practice is to use this principle to weed one's investments: 20% of your holdings produce 80% of benefit, while 80% produce only 20% of reward. By identifying and dumping the 80%, one's return can be (temporarily) enhanced. Then again, 20% of one's investments hold 80% of the risks.

This procedure can also apply to friendships. If 20% of one's acquaintances produce 80% of benefit, would it not be wise to identify those who really do enhance your life and then nuture those relationships? Are all those Facebook "friends" of equal value to you?