Data graphics are frequently used for comparisons, whether comparing the number of wi-fi networks across states, ad spending from year to year, efficiency of baseball teams from coast to coast, or labor costs across countries.
Comparability is not always attainable but such situations can often be rescued through data transformation or standardization. For example, unit labor costs were compared against the EU average. Avoid the pitfall of comparing apples with oranges, as in the following set of charts from a McKinsey report:
The accompanying (abridged) report has this to say about the graphs:
Germany, Japan, and the United States have traditional hump-shaped life cycle savings patterns. In these countries, aging populations will cause a dramatic slowdown in household savings and wealth. In contrast, Italy has a flatter savings curve, resulting in part from historical borrowing constraints that forced households led by people in their 20s and 30s to save more. Thus an increase in the share of elderly households will have less impact on the country's financial wealth.
A first glance at the charts can leave one mystified as to how Italy's curve is "flatter" and not "hump-shaped" like those of Germany, Japan and the U.S. A closer inspection reveals that each chart has its own scale because the savings rate is expressed in each country's currency. The junkchart version below establishes comparability by expressing all amounts in U.S. dollars (using the Jan 3, 2000 exchange rate); once that is done, all five curves can be plotted on the same graph, facilitating visual comparison.
Numerous insights become clear:
- Italy's savings rate is much higher than those of the other four countries. Its savings curve has a clear hump which occurs at around 55-60 years, later than several other countries.
- Germany and the UK both have flat savings curves (but not Italy).
- Japan, the U.S. and the U.K. have curves that dip below 0, an important feature that was not mentioned in the summary report. (It is unclear why in the original version, the scales for Germany and Italy started at -1 and -2 even though all values are positive.)
- Japan, the U.S. and to a lesser extent Germany have similarly shaped curves, with plateaux at around 30-50 years. Italy and the U.K. curves peak after 55 years. A key observation, made in the report, was the myth that the Japanese saved much more than Americans; not true in recent years, apparently due to the rapidly aging population.
- The U.K. has the only rising curve (but note that data for 70-80 years is missing).
Reference: "The Demographic Deficit: How aging will reduce global wealth", McKinsey Quarterly, March 2005.