Opinion

Felix Salmon

Adventures in information design, WSJ edition

By Felix Salmon
September 13, 2010

Last week, Justin Lahart presented an interesting thesis in the WSJ:

For American business, it has become a two-track economy.

While global players like industrial conglomerate 3M Co. and burger giant McDonald’s Corp. are getting ever-bigger boosts from their operations in fast-growing economies like China and Brazil, companies dependent on the U.S. market are hemmed in by recession-scarred consumers who are hesitant to spend.

The accompanying chart was one of the most incomprehensible things I’ve ever seen on newsprint:

worsechart.jpg

I doubt that one reader in 20 actually understood, on looking at this chart, the information it was ostensibly trying to get across.

There are three axes here, and two colors, and all manner of confusion. It took me a while to work it out, but I got there in the end: the height of the bars represents a healthy year-on-year increase in projected revenues. They increase in volume the further that number is from zero, so that the smallest bars aren’t the companies with falling revenues, but rather the companies with flat revenues. That’s silly. And because of the 3D effect, the biggest bars have much more volume than the smallest ones, as though the product of the two variables is somehow important. (It isn’t.)

The amount of color in a bar represents the proportion of those revenues that come from outside the US. The main axis we see when we look at the chart — the one marked with a bold black line — doesn’t actually represent anything at all. Oh, and the chart claims to be “an analysis of the 30 companies in the Dow”, but it only features ten stocks.

The weird thing is that Lahart’s thesis would come out loud and clear from a simple scatter chart. Put the change in revenue on one axis, put the percentage of revenue coming from overseas on the other axis, and look for two clusters: one at the top right, with the companies active in fast-growing countries, and one at the bottom left, with the companies hemmed in by recession-scarred consumers.

It took me a while, but I eventually got my hands on the data that Lahart was using. So I decided to plot that scatter chart, to see what it looked like:

betterchart.jpg

I’m not a professional designer, and this could certainly be a lot prettier, especially if I could get my fonts to work and if I remembered to get rid of those silly decimal places on the y-axis. Still, the message of this chart is much clearer, I think, than that of the one in the WSJ. It does show a clear correlation between revenue growth and foreign sales, but I can’t see much of a case that American businesses have diverged onto one of two tracks.

All of my numbers are exactly the same as the ones that the WSJ used — even the 0% of foreign sales for Verizon, which resulted in a correction. (Verizon claims it gets some revenue abroad, although it’s less than 10%.) So I’m puzzled why the WSJ didn’t include Caterpillar as one of the “five companies with largest share of overseas revenue”: it’s up there in fourth place, with 67%, higher than both Hewlett-Packard and McDonald’s.

So, what really happened here? Did Lahart know that a clear chart would somewhat undercut his headline talking about a “two-track economy”, and therefore contrive something messier instead? Or was there just an overenthusiastic new kid at the WSJ who hasn’t read his Tufte? Either way, it would be great to see a stronger emphasis on clear information design at the WSJ. Financial publications have an especial responsibility to do this kind of thing well, given the highly-quantitative nature of what they’re writing about. The NYT has fantastic information designers; let’s hope the WSJ tries hard to compete on that front.

Update: Andrew Burton points out there’s actually a Wall Street Journal Guide to Information Graphics, by Dona Wong, available on Amazon in hardback for $19.77. I wonder what she would have to say about the WSJ’s chart.

Comments
5 comments so far | RSS Comments RSS

Good article Felix, although I think you’re going light on the WSJ. Most long time WSJ readers know the answer to your first question (Did Lahart know that a clear chart would somewhat undercut his headline talking about a “two-track economy”, and therefore contrive something messier instead?) is in all likelihood a yes.

A rational story mentioning that for the next 12 months international growth prospects appear greater than domestic growth prospects, illustrated by your scatter chart, of course would be more informative than some story declaring there is now an economic schism with two growth tracks, but it’s not sensationalist enough for the new paper.

An even better approach would be to use your dataset and duplicate the results for the last ten years to see if anything has even changed. I suspect that for much of the last ten years foreign growth prospects have been higher than domestic growth and there’s really nothing new here despite a full above the fold story/graph package in the WSJ with giant bold headline fonts historically reserved for the outbreak of a world war.

It’s too bad, but particularly in the last 12 months the WSJ has accelerated its move from from a sober, trustworthy, business voice of record to a rabble-rousing, picture heavy, sensationalizing/political paper – as you and many others have pointed out.

Posted by tyler7 | Report as abusive
 

Are you kidding? Your scatter chart is incomprehensible, while the Journal’s chart struck me as an elegant way to show how greater sales abroad correlates to revenue growth. Your observation that “the chart claims to be ‘an analysis of the 30 companies in the Dow’, but it only features 10 stocks” only goes to show how little thought you put into this. The chart clearly states that it focused on the five companies of the 30 Dow members with the largest share and the five companies with the smallest share of overseas revenue.

Posted by Citoyen | Report as abusive
 

Never been a fan of scatter charts. At least yours wasn’t one of those especially horrid ones when each plot is a different-sized circle (usually based on market share or something).

Not the biggest fan of the WSJ’s chart, but I like it better than the scatter chart.

Posted by glenngulia | Report as abusive
 

And the bold black line doesn’t represent anything? Huh?

That’s X-axis, no? Bars going down from it have negative projected revenue (Verizon, B of A). Bars going up from it have positive projected revenue (the other 8).

Posted by glenngulia | Report as abusive
 

Of course, this would be MUCH better if they simply showed the growth rate of overseas revenues and the growth rate of US revenues.

Posted by MitchW | Report as abusive
 

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