Pareto Chart

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In business, the 80/20 rule is often used to identify areas where a company can get the most bang for its buck. The theory is that 20% of your efforts will result in 80% of your results.

This principle can also be applied to data analysis in what's called a Pareto chart. Named after Italian economist Vilfredo Pareto, who first observed the 80/20 rule, a Pareto chart is an efficient way to visualize and compare data to see which category is contributing the most to a given goal.

What is a Pareto Chart?

A Pareto Chart is a graphical tool used to identify the most important factors in a given problem. It was named after Vilfredo Pareto, its originator, who developed the 80/20 rule. It is a bar chart that arranges bars (counts) from largest to smallest, from left to right. By displaying cumulative totals in descending order, it makes it easier to identify the most frequent defects or complaints related to any given situation. Additionally, it helps users direct their efforts on areas where they will have the highest impact. The Pareto Chart is useful across many different industries and applications which makes it an invaluable tool for both quality improvement and general data analysis purposes.

See Also