Vilfredo Pareto

Lore & Background

Pareto was born in Paris in 1848 to an exiled noble Genoese family. His father was an Italian civil engineer and Ligurian marquis, and his mother was French. He was named Wilfried Fritz at birth, later becoming Vilfredo Federico after his family returned to Italy in 1858. He earned a doctorate in engineering in 1869 from what is now the Polytechnic University of Turin, with a dissertation on equilibrium in solid bodies, which influenced his later work in economics and sociology.

After graduation, Pareto worked as a civil engineer for the state-owned Italian Railway Company and later in private industry, including as manager of the Iron Works of San Giovanni Valdarno. He did not begin serious work in economics until his mid-forties. In 1886, he became a lecturer on economics and management at the University of Florence. In 1889, after his parents' deaths, he quit his job and married Alessandrina Bakunina, a Russian woman.

In 1893, Pareto succeeded Léon Walras to the chair of Political Economy at the University of Lausanne in Switzerland, where he remained for the rest of his life. There he published a textbook containing the Pareto distribution of wealth, which he believed was constant across all human societies. In 1906, he observed that 20% of the population owned 80% of the property in Italy, later generalized as the Pareto principle. His later years were spent on his best-known work, Trattato di sociologia generale (1916), which developed the concept of the circulation of elites.

Reader's Guide

Pareto's significance lies in his introduction of concepts that remain central to economics and sociology. He introduced Pareto efficiency, a cornerstone of microeconomics, and was the first to claim that income follows a Pareto distribution, a power law probability distribution. The Pareto principle, named after him, emerged from his observation that 80% of Italy's wealth belonged to about 20% of the population. In sociology, he developed elite theory and the notion of the circulation of elites, arguing that history is driven by the struggle between elites and the masses. His work in sociology also emphasized that much social action is nonlogical, driven by 'residues' and 'derivations.' Pareto's ideas influenced American sociologists such as Talcott Parsons and were introduced to the United States by figures like George C. Homans and Lawrence Joseph Henderson. His legacy includes a lasting impact on the study of income distribution, individual choice, and social cycles.

Did You Know?

• Pareto was born in Paris in 1848, the year of popular revolutions, and was originally named Wilfried Fritz.
• He earned a doctorate in engineering with a dissertation on 'The Fundamental Principles of Equilibrium in Solid Bodies.'
• He did not begin serious work in economics until his mid-forties.