Question

what term is used to describe that in many circumstances 80% of consequences come from 20% of the causes, thereby asserting an unequal relationship between inputs and outputs?

Answer 1

The term is the Pareto Principle or the 80/20 Rule, which indicates that in many situations, a large majority of effects are due to a small minority of causes.

Step-by-step explanation:

The term used to describe the phenomenon where 80% of consequences come from 20% of the causes is known as the Pareto Principle or the 80/20 Rule. This rule is a common heuristic in business and economics indicating an unequal relationship between inputs and outputs. It highlights that a minority of causes, inputs, or effort usually lead to a majority of the results, outcomes, or rewards.

As an illustration, considering the Great Recession of 2008-2009, a small percentage of individuals within the financial system—largely bankers and financial managers—were responsible for the mismanagement that led to a global economic downturn. However, the majority of the consequences such as unemployment and reduced incomes were disproportionally borne by those in lower income quintiles. This real-world example underscores the disproportionate and often unjust outcomes that can result from the actions of a few.

The Pareto Principle is valuable for resource allocation, decision-making, and analyzing efficiency. It helps businesses and individuals to focus on the most productive activities and to identify areas of waste.