Vilfredo Pareto(1848 — 1923)
Vilfredo Pareto
France, royaume d'Italie
6 min read
Vilfredo Pareto (1848-1923) was an Italian economist and sociologist, a major figure of the Lausanne School. He left his mark on neoclassical political economy and sociology through his work on the distribution of wealth and the behavior of elites.
Frequently asked questions
Key Facts
- Born in 1848 in Paris, died in 1923 in Céligny (Switzerland).
- Succeeded Léon Walras to the chair of political economy at the University of Lausanne in 1893.
- Formulated the law of income distribution (Pareto's law) in 1896, the origin of the so-called “80/20” principle.
- Defined the concept of Pareto optimality, a state in which one cannot improve one person's situation without worsening another's.
- Published his “Treatise on General Sociology” (1916), developing the theory of the circulation of elites.
Works & Achievements
Major work in which Pareto formulates his law of income distribution and applies mathematics to economics.
A critical analysis of socialist doctrines and the first outline of his theory of the circulation of elites.
Introduces the Pareto optimum and indifference curves, foundations of modern welfare economics.
A statistical observation on the concentration of wealth, which became a universal tool in economics and management.
A key concept of economic efficiency: a situation in which no one's lot can be improved without harming someone else.
A sociological synthesis of more than 2,000 pages theorizing residues, derivations, and the circulation of elites.
Anecdotes
Before becoming an economist, Pareto worked as a railway engineer and then as the director of an ironworks company in Italy. It was only after the age of 40 that he became a professor of economics in Lausanne, succeeding Léon Walras. His background as an engineer explains his fondness for mathematics and for curves applied to economics.
By studying the tax records of several countries, Pareto noticed that about 20% of the population owned 80% of the wealth, and that this proportion repeated itself strangely from one era and one country to another. This observation became the famous “Pareto principle,” or “80/20 rule,” still used today in management and economics.
Pareto was a strong-willed character, often at odds with those in power. At his villa in Céligny on the shore of Lake Geneva, he kept a great many cats, so many that his neighbors had nicknamed him the “hermit with the cats.” There he worked apart from the academic world he was fond of criticizing.
To explain history, Pareto coined the idea of the “circulation of elites”: according to him, ruling groups are constantly renewed, with the old elites being replaced by new ones. He compared history to “a graveyard of aristocracies,” a phrase that has remained famous in sociology.
In 1923, shortly before his death, Mussolini's fascist regime sought to claim Pareto's prestige by appointing him a senator of the Kingdom of Italy. Pareto, already very ill, hardly ever took his seat. Historians still debate his ambiguous relationship with fascism, which he observed without being a committed supporter.
Primary Sources
The income distribution curve displays a remarkable regularity: in the societies we have been able to observe, the shape of this curve varies very little.
We shall say that the members of a community enjoy maximum ophelimity at point P when it is impossible to move even slightly away from this position in such a way that the ophelimity enjoyed by each of the individuals increases.
History is a graveyard of aristocracies. Elites do not last; they succeed one another.
The struggle for life and for well-being is a general phenomenon that manifests itself in various forms according to times and places.
Key Places
Pareto's birthplace in 1848, where his Italian family had gone into exile for political reasons.
The city where Pareto studied engineering at the Polytechnic School, acquiring his mathematical training.
The city where Pareto worked as an engineer and then as director of an iron-and-steel company, and where he took part in economic debates.
Where Pareto succeeded Léon Walras in 1893 and developed the bulk of his economic and sociological work.
A Swiss village on the shore of Lake Geneva where Pareto owned his villa “Angora” and where he died in 1923.
