The 80-20 Rule, Illustrated

The 80-20 rule “states that, for many events, roughly 80% of the effects come from 20% of the causes.” This rule seems to hold with respect to wealth; that is, about 20 percent of individuals own about 80 percent of the wealth of the world. It’s not that the 20 percent “claim” 80 percent of the wealth (as some would have it), but that the 20 percent have earned 80 percent of the wealth. (The extent of inherited wealth is vastly overstated. And, besides, the prospect of leaving money to one’s heirs — and to charities — stimulates the accumulation of wealth and the beneficial economic activities that give rise to it.)

A good illustration of the 80-20 rule is found in baseball statistics. In the past 50 seasons (1963-2012), there were 1,370 baseball players who compiled one or more seasons in which they appeared at the plate often enough to qualify for a batting championship. Of those 1,370 players, it took only 19.2 percent (264 of them) to compile 80 percent of the single-season batting averages of .300 or higher. (For those of you who live on a remote planet, a batting average of .300 or more — 3 or more hits in every 10 times at bat — has long been considered an outstanding performance in baseball.)

Further, the 1,370 players compiled a total of 6,724 seasons in which they qualified for a batting title. But only 21.4 percent of those seasons resulted in a batting average of .300 or higher. The 19.2 percent of players who accounted for 80 percent of the .300-plus seasons compiled them while playing a total of 1,153 championship-qualifying seasons — 17.4 percent of the 6,724 championship-qualifying seasons played.

Excellence really is a relatively rare (and non-random) commodity. It should be celebrated and emulated. “Progressive” levelers, however, envy those who attain excellence, and use the power of government (i.e., taxation and regulation) to discourage it and penalize its fruits.