The Pareto Frontier & defining success

Every time I participate in a High School reunion, I get a choice on how I compare myself to others.

One possibility is to notice that, amongst my former classmates, there is at least one who earns more than me, at least one who has more free time than me, and so on.

Another possibility is to notice that, amongst my former classmates who make at least as much money as me, I’m the one with the most free time. And amongst those who have at least as much free time as me, I’m the one who makes the most money.

Learning to see success using this lens is highly beneficial.

For example, do you want to be the most successful you can be, or do you want to be the most successful you can be while always having dinner with your family? Then, you shouldn’t compare yourself with anyone who doesn’t also spend all dinners with their family.

Never compare yourself with someone having different boundaries, or optimizing for different objectives or for a shorter time horizon.

It might lead you to unhappiness and/or to make counterproductive decisions.

The Pareto Frontier

Above, I presented two ways to compare yourself to others.

1. “There is someone who earns more than me and someone with more free time than me.”
2. “Amongst those who earn at least as much as me, I have the most free time, and amongst those who have at least as much free time as me, I earn the most.”

The second type of evaluation is called the Pareto Frontier, taking the name from the Italian mathematician Vilfredo Pareto (the same one who invented the Pareto Rule, also called the “80/20 rule” – 20% of your customers are responsible for 80% of your problems, etc.)

In particular, I am at the Pareto Frontier if, given two metrics A and B, among everyone who has at least as much A as me, I have the most B, and among everyone who has at least as much B as me, I have the most A.

Below, an image of the Pareto Frontier. All red dots are on the Pareto Frontier.

Thinking in terms of Pareto Frontiers is very useful.

First of all, defining whether you’re successful based on whether you’re at the Pareto Frontier for a set of properties you’ve chosen is a relatively healthy way of comparing yourself to others. Of course, it would be better not to compare yourself to others at all, but it’s rather unrealistic.

But perhaps more importantly, defining success in terms of Pareto frontiers helps you avoid the temptation to follow those who take excessive risks or make sacrifices you’re not willing to take.

Instead of aiming to be the most successful, aim to be at the Pareto Frontier of what matters to you.

Your distribution of outcomes will improve.

Note: the text above is an excerpt from my upcoming book, “Winning Long-Term Games” (previously referred to as “Reproducible Success Strategies”). I’m working hard to release it by Christmas, but I cannot make any promises on the timeline – it might shift to early 2024.