Pareto vs Survivorship Bias. I had this confusion when I was going to focus to which one of the activity that productive to me when doing business from internet.
Pareto principle is basically telling you that 80 percent of the results come from 20 percent of the effort. In order word, only focus on 20 percent that gains you the most results.
Pareto is said to be successfully accurate in economics, business, science, software, health, and other sort of things.
What bothers me is that Pareto is severely bias, not all 80% fitness comes from 20% effort because it might because that only 20% of the effort is needed instead of the 80% of the rest.
Well, that’s not quite helpful to understand the Pareto principle.
In another word: focus success and repeat success, or rinse or repeat. I have a problem with this statement, because of the law of uncertainty and quantum mechanics. Not all success can be repeated. Especially if you leave out the 80% of the factor and only follow the 20% of the result.
But majority of the population will follow Pareto. That’s just how it goes.
This also confuses me with Survivorship bias, which is contrary to the Pareto.
Survivorship bias is a bias that come from not knowing the failure, which 80% pareto has.
In survivorship bias, not knowing the failure is said to be not knowing the success also.
Like the comic above, you cannot conclude that just because a woman who lives over a hundred year causes by rum and cigars diet. That is the survivor factor. The failure factor (80%) comes from other woman who also had the diet and not survived (a.k.a dead).
In other word, you must not focus only on success, but also find the hidden failure that makes up the success.
So you must know the success and also the failure in order to claim the success, not just the 20% of it and ignore the 80% of the rest.
In real world, to apply this principle you must not read only success books to find what success people did, but you must also find what success people didn’t do.
However, it’s going to be a waste of time to get the 80% but it completes the understanding of how success mechanic work in pareto vs survivorship bias.
So which one will you follow?
Pareto or Survivorship Bias?