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The 20-60-20 Rule

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  • Piotr Jaworski
  • Marcin Pitera

Abstract

In this paper we discuss an empirical phenomena known as the 20-60-20 rule. It says that if we split the population into three groups, according to some arbitrary benchmark criterion, then this particular ratio implies some sort of balance. From practical point of view, this feature often leads to efficient management or control. We provide a mathematical illustration, justifying the occurrence of this rule in many real world situations. We show that for any population, which could be described using multivariate normal vector, this fixed ratio leads to a global equilibrium state, when dispersion and linear dependance measurement is considered.

Suggested Citation

  • Piotr Jaworski & Marcin Pitera, 2015. "The 20-60-20 Rule," Papers 1501.02513, arXiv.org, revised Aug 2015.
    • Handle: RePEc:arx:papers:1501.02513
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    References listed on IDEAS

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    1. Piotr Jaworski & Marcin Pitera, 2014. "On spatial contagion and multivariate GARCH models," Applied Stochastic Models in Business and Industry, John Wiley & Sons, vol. 30(3), pages 303-327, May.
    2. Joseph Persky, 1992. "Retrospectives: Pareto's Law," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 181-192, Spring.
    3. Fabrizio Durante & Piotr Jaworski, 2010. "Spatial contagion between financial markets: a copula‐based approach," Applied Stochastic Models in Business and Industry, John Wiley & Sons, vol. 26(5), pages 551-564, September.
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