Formalization of the generalized Pareto principle and structural typicality of the 20/80-rule

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Authors: Antti Hippeläinen
Cited by: 0

Abstract

We formalize a generalized form of the Pareto principle - ``fraction $p$ of inputs yields fraction $1-p$ of outputs'' - as a property of non-negative gain densities $\ell \in L^1([0,1])$, working with the decreasing rearrangement to obtain a unique characterization. For probability distributions, the resulting $p$ coincides with $1 - k_F$, where $k_F$ is the Kolkata index of the corresponding Lorenz curve. Within this framework we analyze both constructed gain densities and commonly encountered distribution families. We derive closed-form expressions for $p$ for truncated power-law, exponential, and normal distribution families. Combining these with estimates of the truncation parameter as a function of sample size $N$, we predict that datasets of size $N \in [10^2, 10^5]$ from exponential and normal families concentrate $p$ near $[0.15, 0.26]$ and $[0.20, 0.29]$ - values close to the canonical 0.2/0.8-rule, and strictly below the saturation $k \approx 0.865$ conjectured earlier by Ghosh and Chakrabarti. We discuss the implications of the structural ubiquity of Pareto-type imbalances for their use as prescriptive targets.

Fields of Study & Subjects

Complex Systems and Time Series Analysis Statistical Mechanics and Entropy Income Poverty and Inequality

Publication details

Journal / source
arXiv (Cornell University)
Publication date
11 February 2026
Language
EN
Document type
Preprint