Raising the bar

What is a Pareto chart and how is it different from a histogram?

Instead of going directly to the description of a Pareto chart, as some sites do, it is better to start with motivation. The next example is taken from my book:

Suppose there are too many traffic jams in the city and the mayor is determined to eliminate them. Among the reasons of traffic jams there are: lack of parking space in the center of the city, car accidents, absence of car junctions in critical areas, rush hours etc. It makes sense to start dealing with problems that have the highest impact on traffic jams frequency. Such problems (categories) on the histogram should be put first.

Now (and if you know what is a histogram) it is easy to understand the definition of a Pareto chart: it is the same as a histogram, except that the observations are put in the order of decreasing frequencies. Recall that on the histogram we put frequencies against values of the variable, so on the Pareto chart we additionally move more frequent observations to the left.

Remember: If your variable is numerical, on the histogram its values will be displayed in a natural (numerical) order. On the Pareto chart the natural order is lost and superseded by the order of frequencies of values.