Pareto's Distribution

Pareto’s Distribution (The 80-20 Rule) is an observation that, for any situation 80% of the effects, come from 20% of the causes. With income distribution it states that income distribution is constant, regardless of any tax or welfare policies, i.e., 20 percent of the people own 80 percent of the wealth. The value of this principle is as a reminder to focus on the 20 percent that is important.