Download - Lean Self: The Luck Factor
leanself.org Jens R. Woinowski
In 1906, Vilfredo Pareto made an astonishing observation:
80% of the land belonged to 20% of the people
Since then, many similar observations have been made, for example about the sizes of cities in a country
The mathematical concept of a Pareto Distribution has been developed
Lean uses Pareto charts as input for decision making and continuous improvement
Pareto, Bell, Wealth, and Luck
Especially for wealth you might expect (or wish) a normal distribution:
Some very rich people
Some more comfortably wealthy
Then the bulk of average guys
Some who had bad luck
And finally the really poor
Starting with a population with normal distributed wealth, every member of the population can gain or lose money
Very simple:
Every simulation step, the current amount of each member’s money would be multiplied with a number between 90% and 110%
Following is the start of the simulation
Observe the flat line on the left and the Bell curve on the right
In each single step “LUCK” is randomly distributed over all members ...
... in real life, people with more fortune have better interest rates
There is no consumption of goods and fortune ...
... which usually hurts wealthy people less
There is no state collecting taxes ...
... but also no welfare for the poor
There is no inflation ...
... but the charts show no absolute numbers
There are no companies who make a profit from their work forces ...
... but also no secure salaries, only random interest rates at work
The number of simulation steps is very high ...
... but this may reflect the effects of inheritance
About the Author
Jens R. Woinowski is working as a quality and risk manager at a major IT company. In his job, he learned about the power of Lean. At home , he discovered that you can use it beyond business . He blogs regularly about the application of Lean to personal matters. © 2014 Jens R. Woinowski
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