Differences between Pareto Principle and Pareto Optimization problem?
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The principle is the often cited 80/20 rule, where 20% of “x” controls 80% of “x”. Or 80% of the problems are caused by 20% of the people. Or 80% of the software errors are caused by 20% of the code.
Pareto optimization is about maximizing the outcomes of a system, where you cannot make any change that somehow doesn’t cause a worse outcome in some way. You’ve maximized all the parameters such that changing one can make it worse elsewhere.
For example, increasing an advertising budget may increase sales, but it will decrease the budget for engineering so less units will be produced for sale. Or you can only decrease quality so much that everyone stops purchasing.
The Pareto Principle isn’t a hard rule, it’s more of an observation of trends in life. It originated from an Italian economist in the early 1900’s who observed that vast majority of wealth in Italy was controlled by 20% of the people.
It could be simplified by saying the majority of things that happen are as a result of a few small few inputs.
20% of movies are responsible for the majority of ticket sales.
20% of drivers are responsible for the majority of car accidents.
Again, this isn’t like some physical property of the universe, it’s just a casual observation in how things work in real life.
Pareto Optimization is the idea of, if want to drive a change in a system as simply as possible, how do I target the most important, smallest group of inputs?
Think of it like a very practical form of making a policy.
If I want to save the most lives from car accidents, I can either enact some sweeping plan that effects *everyone* (but that is probably really expensive and likely impossible) or I can specifically target those 20% of drivers who cause the most accidents which is much more practical.
If I’m trying to increase sales of my product X, instead of offering some nationwide campaign, I can selectively target a discount or advertising campaign at the 20% of people who buy the most of my product, more easier and more practical.
Just pointing out something that other folks didn’t explicitly say:
These are two terms both named for the same person (19th-20th-century Italian engineer & economist Vilfredo Pareto), but they’re not otherwise related to each other.
This is a common problem in the sciences, where things are often named after the person who invented, discovered, or popularized them. When the same person invents two or more things, they often get related names even if they’re not otherwise related.
That happens very often in math. [For instance,](https://en.wikipedia.org/wiki/List_of_things_named_after_Leonhard_Euler#Numbers) “Euler’s constant” is a number, but is not the same as “Euler’s number”, which is not one of the “Euler numbers”, which are not the same as the “Eulerian numbers”, or the “Euler number” of a fluid under pressure, or the “Euler characteristic” (which is also a number).
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