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And the title for worst graph goes to…


In the wake of my cautionary note about terrible business graphics, I submit the following from the NYT:

Europe's Web of Debt

By representing debt in absolute quantities, the graphic paints a very inaccurate picture about the magnitude of the problems in each country. I sent this letter to the NYT:

This graphic is a poor representation. Your image implies that the Spain and Italy have a much more serious problem than, say, Ireland, Greece or Portugal.

But you’ve misrepresented the problem. Per capita, Portugal, Greece, Italy and Spain have about the same amount of international debt, ranging from $22.5K per person (Spain) to $28K per person (Portugal).

Ireland, with its meager population of 4.4 million, has a staggering $197K per person of foreign debt.

You could also consider debt as a fraction of annual GDP. For all but Ireland, that value is less than 1. For Ireland, debt is 3.2 x annual GDP, a substantial difference.

Your graphic and your article completely fail to appreciate these differences. Perhaps hiring an economist to review articles about economics would be helpful.

Think, for a moment, if this had been a graphic showing absolute values of infant mortality, or cancer diagnoses, or auto accidents. Direct comparison of absolute values would be useless.

3 Comments leave one →
  1. 2010-05-03 12:13 pm

    I don’t really agree. Sure, a per-capita or per-GDP number may be a better measure of a country’s ability to manage its debt. But in considering effects across national borders, the absolute size of economies is also important.

    For example, “Can Germany afford to bail out Spain and Ireland as well as Greece?” The answer to that question depends more on the absolute size of the Irish and Spanish debt, not just the per capita debt (or if you like, the denominator has become German population or German GDP).

    The point of the article, as I see it, is to suggest the possibility of a domino effect whereby a Greek default pushes Portugal over the edge and so forth. I’m not sure that the graph really supports the verbiage, e.g. the article describes a loss of the $10 billion Greece owes Portugal as a “staggering blow,” but the graph shows this is only 3.5% of Portugal’s total debt. However, I don’t see how you can draw this graph without using a common currency like absolute dollars.

    To put it another way, each arrow in the graph joins two countries, so which population or GDP would you divide by?

    • Rick Russell permalink*
      2010-05-03 12:55 pm

      I think a good graphic design could accurately communicate the magnitude of the international debt in relative terms. E.g., a trapezoid scaled at each end according to debt per GDP or something like that. Certainly better than what they published, anyway. It would have made a lot more sense to simply show the balances of debt, rather than two arrows for each pair of countries.

      For example, you point out that the “$10 billion staggering blow” is actually a small part of Portugal’s debt load. $10 billion means a hell of a lot more to a country like Ireland, over-leveraged with only 4.4 million citizens (more than $2K per person!), than it does to a country like Italy with 60 million citizens and a much more reasonable ratio of debt-to-GDP.

  2. 2010-05-03 12:22 pm

    There’s arguably another problem with the graph: the arrows of debt flow show debt proportional to width, but the circles of debt show debt proportional to area, so the visual relation of the arrows to the circles is distorted.

    However, this is a tricky problem to escape.

    Maybe you could have hollow “rings” of debt (circumference proportional to debt) rather than solid circles of debt.

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