Thursday, November 13, 2008

The 20/80 principle...

The Pareto principle (also known as the 80-20 rule) states that, for many events, 80% of the effects come from 20% of the causes. Pareto was the first to observe that 80% of income in Italy went to 20% of the population and found it to be valid for the economic distribution in various other countries. Pareto developed the concepts in the context of the distribution of income and wealth among the population. Actually, the Pareto principle was first conceptualized by Juran. His classic book, Managerial Breakthrough, was the first book to describe a step-by-step method for breakthrough improvement, which is the basis of Six Sigma today.

A parameter that is related to the Pareto's principle is the Gini index. If 80% of the effect come from the top 20% of causes, then the Gini index is 80-20=60. If 70% comes from 30%, Gini index is 70-30=40 and so on. If 50% comes from 50%, then it is the ideal with a Gini index of 0. The Gini coefficient is primarily used to determine the level of inequality in the income levels of the country. India's Gini coefficient, which was around 30 in 1960's and remained constant around that value till 1990 has risen from 30 to nearly 42 in 2003. China has also increased its Gini coefficient from 30 from 1980 to 47 in 2003. USA, Mexico and Brazil have higher Gini coefficients than India. The lowest Gini coefficients can be found in Scandinavian countries and Eastern Europe countries. Higher coefficient is bad, if you are a socialist, and indicates disparity of wealth.

How can these parameters be used in a research institution? Inspired by our director's article, I set out analyzing the trends in journal subscription. It was determined (see detailed analysis here) that the scientists in IISc publish 80% of the papers in 20% of the journals that IISc subscribes to.

Can this be extended to determine the effectiveness of an institution? For example, Gangan Pratap, the vice-chancellor of CUSAT, proposed a technique based on h-indices to evaluate institutions [In case you are interested, h1=71 (for the period of 2000-2004) and h2=26 for IISc]. An additional parameter could be the Gini index, which shows the inequalities within the institution. An analysis indicated that 77% of the publications for the period of 2002-2007 came from 23% of the faculty in IISc, effectively resulting in a Gini index of 54. A similar analysis indicated that MIT had a Gini index of 32. Of course, Gini index will be useful only in determining inequality in good institutions i.e., with high h1 and h2. One will have a Gini index of 0 when no one publishes ! When comparing two institutions with similar h1 and h2, maybe the Gini index can provide information on the "equality" of all faculty.


Arati said...

Thanks Giri,

That was an interesting read - much more than I previously knew on 80/20 principle.

Anonymous said...

I think first they have to use h-index to determine who gets awards (like Shanti Swarup Bhatnagar). It is really pathetic, that some get these awards, while just barely managing to have a double digit h-index.