Pareto principle pending?

Because former Harvard University President Lawrence Summers was summarily defenestrated from his prestigious ivy-draped office (for presuming to observe that some sectors of the population-in Cambridge, Mass., a clear political, if possibly not demographic, majority-do better in graphics than numbers), I'll avoid the right-brain and left-brain question, and the underlying statistics in this column and go directly to the basic principle of consumer behavior and the charts which illustrate it.

The principle has been called the tipping point and it refers to the repeated empiric observation that, if and when 20 percent of the population make a consumer choices of goods or services, the remaining 80 percent mostly soon follow. It has worked in the past for such new goods as automobiles, refrigerators, and T.V. receivers, and most famously for services, showing up in such patterns as urban middle-class flight from court-ordered underclass school enrollment mixing, commonly labeled "white flight", although, as both Kansas City and Detroit statistics illustrated, middle-class black flight was numerically proportionate to middle-class white flight from newly-disrupted classrooms.

The chart here is the s-curve, which wasn't invented by economist Harry Dent but was publicized by him in his 1999 book, "The Roaring 2000s".

It has three phases: a slow "Innovation" stage where brave new consumers try it, a rapidly accelerating Growth phase, where most potential customers buy in; and a final declining-growth maturity phase, in which all of the late and slow who will ever try it finally join in. When you examine the curve you'll see that, if and when it gets to the 20 percent level of market penetration, almost all of the remaining 80 percent will usually soon follow, which explains why it's also known as the Pareto Principle or the 80/20 rule.

I use the qualifier "usually" because there have been exceptions. In education, for example, one took place in the years before and while I was a public school student, typically in 30-student classes with better-than-now test scores, and no college entrants in need of remedial instruction, when the non-public parochial school alternative was increasing its market share; it topped out at about 15 percent or so of total potential enrollment, the age 5-17 cohort. The other took place in the years after I was a public school student, when, I can recall reading, the American public education system was widely described as "the envy of the Western world"; when public education was perceived as so good that there was no need to pay even the typically modest tuition fee for the alternative, and so the market penetration of the non-public alternative shrank. In both cases, the s-curve didn't play out to full completion.

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