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He then carried out surveys on a variety of other countries and found to his surprise that a similar distribution applied.
A chart that gave the inequality a very visible and comprehensible form, the so-called "champagne glass" effect, was contained in the 1992 United Nations Development Program Report, which showed that distribution of global income is very uneven, with the richest 20% of the world's population controlling 82.7% of the world's income.
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.
Eighty percent of 80% is 64%; 20% of 20% is 4%, so this implies a "64/4" law; and similarly implies a "51.2/0.8" law.
Similarly for the bottom 80% of causes and bottom 20% of effects, the bottom 80% of the bottom 80% only cause 20% of the remaining 20%.
In baseball, the Pareto principle has been perceived in Wins Above Replacement (an attempt to combine multiple statistics to determine a player's overall importance to a team).
If the Pareto index α, which is one of the parameters characterizing a Pareto distribution, is chosen as α = log5 ≈ 1.16, then one has 80% of effects coming from 20% of causes.
It follows that one also has 80% of that top 80% of effects coming from 20% of that top 20% of causes, and so on.
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.