Several readers requested that I explain and extend my last posting on the Global 10 companies chart printed in The Economist (see right).
The primary distortion in this graphic is the unequal treatment of two data series, revenues and profits. The decision to treat revenues differently from profits is arbitrary and distorting.
The exact values of revenues are missing, being coarsely represented by horizontal bars against a grid while the precise values of profits are printed to 1st decimal place but with no visual aid for comparison.
The alternative graph I suggested provides equal footing to both series of data:
Here, data values and horizontal lines are plotted for both revenues and profits. Sizing up the profit lines, we can compare profits between these 10 companies: this is hard to do with a list of numbers.
As previously stated, the chart on the right using lines rather than thick bars is preferred: perception studies show that we are better able to compare lines than bars because we do better at comparing line widths than areas. Notice that the height of horizontal bars (similarly, width of vertical bars in a column chart) does not encode any data.
As a further enhancement, I'd make the profits side of the chart roughly equal in size to the revenues side. This feature may mislead some to think that profits and revenues are roughly equal in magnitude but it helps those who want to compare profits between the companies.
Article comments
1 - Phillip Winn
While the scatter-chart is information-dense, it fails to communicate the data quickly, which the Economist chart does very well.
I definitely see your point about lines versus bars. While the bars look attractive, they don't communicate anything more than the lines, and I did fine myself better able to determine the different between lines.
However, in defense of the Economist chart:
1. It doesn't purport to be a chart of the most profitable companies, but the largest. As such, the focus on total revenue to the almost-exclusion of profit seems warranted.
2. Your chart takes up a lot more space, to communicate not very much more information.
However, the Economist chart could be improved, to be sure. I would suggest sticking with the bar chart in this case, so that the actual number could be put within the bar in the way that the profit numbers are put witin the boxes to the right.
The profit is a little more difficult to know how to handle. They can't embed the profit data within the revenue bar without making the chart much, much larger, since $2.8bn barely registers as a blip (1.4%!) of GM's revenue. If the profit bar is big enough to embed '2.8' within it, Wal-Mart's revenue bar (100 times larger) would have to stretch pretty far across the page.
They could simply print the raw data inside the revenue bar, along with the revenue data. That would present no less information than they're presenting now, and the saved horizontal space could be used to extend the scale of the revenue bars.
They could switch the profit boxes to scaled lines and print the numbers above the lines. However, if this is within the same chart box, they need to use the same scale. I really, really, really dislike having two different scales used in the same chart. I think it's very, very, very confusing. So GM's profit ends up looking pretty tiny. As I suppose it should, at 1.4%!
You still end up with the issue of sorting -- which gets back to my first point above. Since the largest companies are not necessarily the most profitable companies, you must sort the chart elements by one or the other. It seems difficult to then mentally sort elements that aren't next to each other.
Of course, creating a second chart in a separate box would allow them to use a less-compressed scale and sort by profit, but then the chart would have to be labeled well: "Profits of the world's biggest companies" so nobody comes away thinking that these are the companies with the ten biggest companies.
My bottom line: I think they should have kept to a single graphical element in the chart and put the raw revenue number, the raw profit number, and the profit as a percentage of revenue inside the bars.
What do you think?
2 - Phillip Winn
P.S. I'm loving these posts! Keep 'em up!
3 - Kaiser
The line chart is only a slight improvement over the bar chart IMO. If space is an issue, I'd just print a table of numbers, or else I'd replace the numbers with revenues data and forego the profit data at all.
The graph loses nothing by not including profits since as you said it is about the "biggest" companies as defined by revenues.
Adding profit to the graph implies they want to make a separate point, which is that the biggest revenues companies are not the most profitable, which is much better shown with the scatter or line plot.
The scatter plot takes some getting used to but it is the only graph out of the three that actually interprets the data.