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By admin, May 31, 2008 5:56 pm

In 1897, Vilfredo Pareto, an Italian economist wanted to find out why wealth is unequally distributed around the world. What, he wondered, that knew that the rich and the poor? While in the moment when it seemed clear that the majority of global wealth is concentrated in the hands of a few, which was not evident was the extent of inequality in the distribution and therefore the 80/20 rule was born.

In short this rule provides that, at any time in any place since approximately 80 percent of the wealth is controlled by 20 percent of the people. While the exact percentage will vary, sometimes it's 90/10, 75/25, or 60/40 the point is that in all cases the distribution of wealth is skewed to an elite minority. Even more surprising is the fact that more than 100 years later, the rule is as relevant today as it was when he arrived with Pareto. In fact, the 80/20 rule or Pareto's theory, as it has come to be known has revolutionized the way think not only wealth, but the world at large, as has been applied to many facets of life.

For example, when your application to find companies that 20 percent of a company's products account for 80 percent of their profits. Also 20 percent of customers provide 80 percent of the income of a company. Twenty percent of offenders are responsible for 80 percent of the value of the crimes committed. With regard to driving 20 percent of drivers are responsible 80 per cent of accidents.

If you think about the lives we spend approximately a third of our lives sleeping, a third of our working life and the rest of time trying to get a life. So again the smallest portion of our life is responsible for our greatest amount of joy. So in any situation the question to ask is which is 80 percent and which is 20 percent. In other words, if you will be happy to ask what is the activity of 20 percent representing 80 percent of your happiness. If you want to be rich wonder what that 20 percent differently that enables them to control 80 percent of wealth. To your business more profitable to ask what is the 20 percent representing 80 percent of its profits and focus on that.

About the Author:

Palmer Owyoung is the Founder of http://www.OptionSpreadTrades.com
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Article Source: ArticlesBase.com – The 80/20 Rule Working Smart Vs. Working Hard

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