Doing the Ordinary Extraordinary: the Pareto Principle, Diminishing Returns, Effective Hours, and Efficiency
By: John Von Neumann Ii
Tags: Life Hacking, Learn, Mathematics, Learning, Productivity

Doing the Ordinary Extraordinary: the Pareto Principle, Diminishing Returns, Effective Hours, and Efficiency

How spending an extra 10 minutes a day can result in a huge ROI

Key words

Pareto principle Blockbuster method Half-life of knowledge Quality versus quantity → effective hours versus quantity hours Top 1%, 10%, 20%, …

The Pareto principle

I have been thinking about this so-called Pareto principle, which says that 80% of the effects come from 20% of the causes. An example is that the top 20% richest people earn 80% of all the income. What it comes down to, is essentially the element of competition. Simply by being in the top 20%, you remove so much competition in the field you are good at. The ‘blockbuster method’ where you spend hundreds of hours to get the quality of your article in the top percentages, and therefore also get like 90% of all the traffic in comparison to other related articles, somewhat also follows the Pareto principle. This is the article for the blockbuster method: https://medium.com/accelerated-intelligence/the-1-mental-model-for-writers-who-want-to-write-high-quality-viral-content-43ecf0d4ec05 — The #1 Mental Model For Writers Who Want To Create High-Quality, Viral Content

Conversion of quantity hours into effective hours

Quantity hours is essentially the hours required without taking into account the factor of the half-life of knowledge, namely that 50% of the knowledge becomes obsolete in 10 years time (see the article linked below). To calculate the effective hours (t,e), you have to divide the quantity hours (t,q) with 1 minus the half-life (t,hl) (e.g. 1–0.50). So the formula becomes:

t,e = t,q / (1 - t,hl).

Example: calculate the effective hours required to get into the top 1% in 10 years’ time, given that it requires 10,000 quantity hours.

t,q = 10,000

t,hl = 0.50

So, t,e = 10,000 / (1–0.50) = 20,000 effective hours

Pareto principle, diminishing returns, and top 1% calculations

So, a thing one has to be careful with, is dealing with diminishing returns.

Let’s say it requires 10,000 quantity hours to get into the top 1% (although this might be an underestimation). Let’s say you reached this number in 10 years by spending roughly 5 hours a day. You might say “But 5 times 365 times 10 equals more than 10,000 hours” and yes, but you also have to take into account the half-life of knowledge: the rate at which knowledge loses value because better knowledge replaces it or it gets disproven. See this article talking about the half-life of knowledge: https://medium.com/accelerated-intelligence/the-math-behind-the-5-hour-rule-why-you-need-to-learn-1-hour-per-day-just-to-stay-relevant-90007efe6861 — The Math Behind The 5-Hour Rule: Why You Need To Learn 1 Hour Per Day Just To Stay Relevant

And taken into account that roughly 50% of the knowledge becomes outdated within 10 years of time, 10,000 quantity hours are more like 20,000 effective hours. We are essentially trying to solve the issue between quality and quantity here in terms of hours. This half-life of knowledge, of course, depends on the field we are talking about.

Pareto principle, diminishing returns, and top 10% calculations

But to continue the story, we said that to get into the top 1% requires roughly 5 hours a day for 10 years. But what about getting into the top 10%? This would require, for the sake of giving an example, “only” 1,000 quantity hours, and if 50% of the knowledge becomes outdated within 10 years, then this would equal 2,000 effective hours in 10 years time. That would require an average of roughly 32.9 minutes of learning a day for 10 years to get into the top 10%.

Here is the interesting part, what if you wanted to get into the top 10% in 5 years time instead of 10? When we follow the same calculations, this is surprisingly more efficient. If 50% of the knowledge becomes outdated in 10 years, then only 25% of the knowledge becomes outdated in 5 years. The 1,000 quantity hours to get into the top 10% become roughly 1,300 effective hours instead of 2,000. That is 700 hours less if you want to learn something in 5 years instead of 10 years. What about the time spent every day? Double that of 32.9 minutes? Nope, only approx. 43.8 minutes a day. An extra 10 minutes every single day can result in a huge return of investment.

Pareto principle, diminishing returns, and top 20% calculations

But let’s say we are being a polymath and don’t want to become an expert, but still enjoy the riches in terms of knowledge in all kinds of different fields, for example, because you are an entrepreneur or simply enjoy diversified knowledge. To get into the top 20% would require half of the time required to get into the top 10%, that is only 500 quantity hours.

Let’s say we want to achieve this within 1 year, the half-life of knowledge for 5 years is 25%; 2.5 years is 12.5%, and 1.25 years is 6.75%. So let’s take the 6.75% number.

500 quantity hours become 537 effective hours. To get these hours within 1 year, would take roughly 90 minutes a day or approx. 11 hours a week. That’s surprisingly not a lot, considering most gamers like me spend way more hours per week than that.

Now, you could say if everyone spent a lot of hours, that would raise those 11 hours a week way more of course, but these calculations were just for the sake of teaching an idea or concept, namely that of outcompeting others (via the Pareto principle), diminishing returns, efficiency in terms of time spent learning every day, and so on.

Pareto principle, diminishing returns, and my own gaming example

An example is the game I play called World of Tanks. I have played since today 6,200 battles. An average battle lasts for around 7 minutes, so that would be 43,400 minutes or 723 hours of playing time since the year 2014–2019. That is 145 hours a year, which is approx. 40 minutes a day. According to the calculations, 40 minutes a day (43.8 minutes a day) for 5 years would result in my being in the top 10%. My average win ratio happens to be somewhere around 56% and the top 1% of the best players are around 65% win ratio, which feels pretty realistic to me, so I guess these formulas also work in gaming examples.

So to summarize

The Pareto principle says that 20% of the causes generate 80% of the effects; To get into the top 1% requires a lot more hours than to get into the top 10%; To calculate effective hours, you have to take into account the half-life of knowledge, and quantity hours The quicker you master something, the more efficient it is in terms of time spent every day (although this one has a bottom limit too, so the graph looks like a U-graph); You don’t have to get into the top 1% to ‘enjoy the riches of knowledge or money’; By quantifying the numbers, getting into the top 20% sounds way more realistic.

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