by Dr Gunjan Y Trivedi. As printed in Divya Bhaskar (Gujarati) newspaper

Examples of Pareto (80/20 rule) in our daily life

Over the past month, I’ve discussed the Pareto Principle, which states that 80% of the outcomes stem from 20% of the efforts or focus areas. Last week, we delved into applying the Pareto Principle to attain work-life balance using the SEE Life Priority Matrix. We pinpointed two criteria, Importance and Satisfaction, to categorise key areas of life like physical and emotional health, career, finances, relationships, social life, and hobbies. By employing these prioritisation principles, we recognised how Pareto can be applied to intricate scenarios such as balancing work and personal life. Today, let’s review data from India and the world where the 80/20 principle is evident.

Because of our young population, let’s focus on India’s economic growth and demographic dividend that will provide a unique opportunity over the next few decades.  By using the concept of Pareto, we can find out that 65% of India’s population is below age 35.  At the same time, some alarming insights come up about the young people in India.  According to the Ministry of Transport & Highways, more people die due to suicide as compared to road accidents in India. About 73% of the total road accidents in India are in the age group below 45, and about 66% of the total suicide deaths happen in individuals below age 45. The Pareto analysis here can provide valuable insights.  Firstly, the death due to suicides in our young populations must be a priority since these situations are preventable.  Secondly, we must give equal (if not more) importance to suicide deaths and not just focus on better roads and safety measures to prevent road accidents.  The young population in India is our unique competitive advantage, provided we can leverage it to take us into the league of developed and higher-income nations.

There are many similar examples from around the world. For instance, as per the World Economic Forum data, there are more than one billion firearms worldwide.  85% of these are in the civilian hands, and only 15% are with the military and law enforcement agencies! Moreover, about 67% of these civilian firearms are owned by people in 5 countries, with America having 43% of the total civilian firearms.  In America, about 80% of the murders are because of firearms, the highest in the form of percentage since 1968.  Unfortunately, controllable causes have a strong negative impact on the young populations of India and America, resulting in a strong effect on the economy and an irreparable loss to the family and the community.

Extending the idea to the economic costs of war preparation, as per the Federation of American Scientists’ data, the United States and Russia together hold more than 85% of the nuclear stockpile in the world!  Regarding business, did you know that 14% of the total 28 states in India (Maharashtra, Delhi, Gujarat and Tamil Nadu) account for 70% of the total net direct tax collation in 2022-23? By now, I hope you understand that the concept of Pareto can be very relevant in several situations, ranging from understanding where to prioritise if we want to save our young population to understanding the demographic dividend to finally identifying the flow of money!

I want to end with an example that I am working on.  Our website (www.wellness-space.net) has several visitors.  We were thinking of re-vamping it, and to my surprise, we realised that 20% of the total 100 pages are visited by about 74% of the total visitors and 80% of the pages are visited only by 16%.  I am grappling with whether I should invest in a new website or focus on the top 20-30 pages, revamp them, and increase the total traffic on our website.  I have also noticed the same challenge with marketing. Pre-covid, more than 90% of customers came from the city, which has changed to <10% of the clients from the city, requiring us to revamp our marketing plan. So, this Holi, please destroy the demons of over-analysis and focus on Pareto or the 80/20 rule!

ડૉ. ગુંજન ([email protected]) એક અનુભવી લાઇફ કોચ અને સલાહકાર છે