The 80/20 Rule Devoted himself to finding laws in economics, trying to make it into an exact science

The 80/20 Rule

• Devoted himself to finding laws in economics, trying to make it into an exact science.

• Author of the three-volume Trattato di Sociologia Generale

• First noticed the 80/20 Rule

• Pareto’s Law of Principle

Examples of the 80/20 Rule

• 80% of Pareto’s peas came from 20% of the peapods.

• 80% of Italy’s land was owned by 20% of the people

• 80% of profit is produced by 20% of employees.

• 80% of crime is committed by 20% of the criminals.

Bell Curve

• In this example, we see the IQ score and the % of the population.

• A Bell Curve does not allow IQ under 0 or over 165 in this modell.

• General rule is that most will be at the center of the curve, while a few will be on the left and right side.

Power Law

• In a Bell Curve you don’t allow the very very “unusual” event.

• The web and number of links follow a power law.

The web and the distribution of links follow a power law, and that shows us that there are a few hubs that has millions of links, but the average is a much smaller number. (1999)

• The web and the distribution of links follow a power law, and that shows us that there are a few hubs that has millions of links, but the average is a much smaller number. (1999)

• Erdòs and Rènyi, along with Watts and Strogatz, both told us that nodes with k links should decrease exponentially. They both told us that hubs do not exist.

• If the 80/20 Rule applies, the distribution can be shown as a power law.

Phase Transition

• Water to ice.

• Metal to magnet.

• From disorder to order.

• After the transition they follow power laws. (?)

• How does order emerge from disorder?

The answer

• Kenneth Wilson (1936 - )

• Renormalization

• Nobel prize in physics 1982