Wednesday, November 23, 2016

Pareto's 80-20 rule in global wealth. .

In 1896, the Italian economist Vilfredo Pareto came out with a factual finding, the 80-20 rule (vital few and trivial many) said that 80% land in Italy is owned by 20% of its people, in the balance 20% of land owned by the rest 80% of the people.

Prof. Juran later extended it to many practical situations like 80% of sales in an organization come from 20% of its customers and so on.

The Global wealth report 2016 published by Credit Suisse yesterday  reveals a couple of startling points.

1. Top 10% of the world population hold 89% of global wealth which in 2016 is estimated to be $256 trillion, ie top 10% of global population (7400 million),  740 million hold $228 trillion wealth and the rest 6660 million people of the world own the balance $28 trillion of global wealth.

Pareto has been proved wrong yet again by global economic leaders and Pareto's 80-20 rule looks to be changing to Pareto's 90-10 rule !!

2. 96% of the global adult population ( > 18-21 years age) remains at the base of the wealth pyramid with wealth below $10,000 ..


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