The 80/20 Principle and The Recession

I’ve been reading The 80/20 Principle and could not help to see the link between this old rule and the current economic conditions.

The principle states generally that 20% of inputs are responsible for 80% of outputs. In the case of the current economy, 20% of the causes, are responsible for 80% of the problems. So let’s look at two things.

  • The number of employed people is over 92%, yet the perception of jobs is that there are not any.
  • The number of foreclosures is under 5%, yet the perception is that everyone is having to loose their homes.

It also seems that fear and uncertainty is driven by even lower percentages than 20%. The doom and gloom seems to creep in at about 5% to 8%.