Following this pretty flow chart

Bloomberg did a very nice feature on how drought has been causing havoc with river transportation of grains and other commodities in the U.S., which included several well-executed graphics.

I'm particularly attracted to this flow chart/sankey diagram that shows the flows of grains from various U.S. ports to foreign countries.

It looks really great.

Here are some things one can learn from this chart:

• The Mississippi River (blue flow) is by far the most important conduit of American grain exports
• China is by far the largest importer of American grains
• Mexico is the second largest importer of American grains, and it has a special relationship with the "interior" ports (yellow). Notice how the Interior almost exclusively sends grains to Mexico
• Similarly, the Puget Sound almost exclusively trades with China

The above list is impressive for one chart.

***

Some key questions are not as easy to see from this layout:

• What proportion of the total exports does the Mississippi River account for? (Turns out to be almost exactly half.)
• What proportion of the total exports go to China? (About 40%. This question is even harder than the previous one because of all the unlabeled values for the smaller countries.)
• What is the relative importance of different ports to Japan/Philippines/Indonesia/etc.? (Notice how the green lines merge from the other side of the country names.)
• What is the relative importance of any of the countries listed, outside the top 5 or so?
• What is the ranking of importance of export nations to each port? For Mississippi River, it appears that the countries may have been drawn from least important (up top) to most important (down below). That is not the case for the other ports... otherwise the threads would tie up into knots.

***

Some of the features that make the chart look pretty are not data-driven.

See this artificial "hole" in the brown branch.

In this part of the flow, there are two tiny outflows to Myanmar and Yemen, so most of the goods that got diverted to the right side ended up merging back to the main branch. However, the creation of this hole allows a layering effect which enhances the visual cleanliness.

Next, pay attention to the yellow sub-branches:

At the scale used by the designer, all of the countries shown essentially import about the same amount from the Interior (yellow). Notice the special treatment of Singapore and Phillippines. Instead of each having a yellow sub-branch coming off the "main" flow, these two countries share the sub-branch, which later splits.

 

 

 

A graphical compass

A Twitter user pointed me to this article from Washington Post, ruminating about the correlation between gas prices and measures of political sentiment (such as Biden's approval rating or right-track-wrong-track). As common in this genre, the analyst proclaims that he has found something "counter intuitive".

The declarative statement strikes me as odd. In the first two paragraphs, he said the data showed "as gas prices fell, American optimism rose. As prices rose, optimism fell... This seems counterintuitive."

I'm struggling to see what's counterintuitive. Aren't the data suggesting people like lower prices? Is that not what we think people like?

The centerpiece of the article concerns the correlation between metrics. "If two numbers move in concert, they can be depicted literally moving in concert. One goes up, the other moves either up or down consistently." That's a confused statement and he qualifies it by typing "That sort of thing."

He's reacting to the following scatter plot with lines. The Twitter user presumably found it hard to understand. Count me in.

Why is this chart difficult to grasp?

The biggest puzzle is: what differentiates those two lines? The red and the gray lines are not labelled. One would have to consult the article to learn that the gray line represents the "raw" data at weekly intervals. The red line is aggregated data at monthly intervals. In other words, each red dot is an average of 4 or 5 weekly data points. The red line is just a smoothed version of the gray line. Smoothed lines show the time trend better.

The next missing piece is the direction of time, which can only be inferred by reading the month labels on the red line. But the chart without the direction of time is like a map without a compass. Take this segment for example:

If time is running up to down, then approval ratings are increasing over time while gas prices are decreasing. If time is running down to up, then approval ratings are decreasing over time while gas prices are increasing. Exactly the opposite!

The labels on the red line are not sufficient. It's possible that time runs in the opposite direction on the gray line! We only exclude that possibility if we know that the red line is a smoothed version of the gray line.

This type of chart benefits from having a compass. Here's one:

It's useful for readers to know that the southeast direction is "good" (higher approval ratings, lower gas prices) while the northwest direction is "bad". Going back to the original chart, one can see that the metrics went in the "bad" direction at the start of the year and has reverted to a "good" direction since.

***

What does this chart really say? The author remarked that "correlation is not causation". "Just because Biden’s approval rose as prices dropped doesn’t mean prices caused the drop."

Here's an alternative: People have general sentiments. When they feel good, they respond more positively to polls, as in they rate everything more positively. The approval ratings are at least partially driven by this general sentiment. The same author apparently has another article saying that the right-track-wrong-track sentiment also moved in tandem with gas prices.

One issue with this type of scatter plot is that it always cues readers to make an incorrect assumption: that the outcome variables (approval rating) is solely - or predominantly - driven by the one factor being visualized (gas prices). This visual choice completely biases the reader's perception.

P.S. [11-11-22] The source of the submission was incorrectly attributed.

Painting the corner

Found an old one sitting in my folder. This came from the Wall Street Journal in 2018.

At first glance, the chart looks like a pretty decent effort.

The scatter plot shows Ebitda against market value, both measured in billions of dollars. The placement of the vertical axis title on the far side is a little unusual.

Ebitda is a measure of business profit (something for a different post on the sister blog: the "b" in Ebitda means "before", and allows management to paint a picture of profits without accounting for the entire cost of running the business). In the financial markets, the market value is claimed to represent a "fair" assessment of the value of the business. The ratio of the market value to Ebitda is known as the "Ebitda multiple", which describes the number of dollars the "market" places on each dollar of Ebitda profit earned by the company.

Almost all scatter plots suffer from xyopia: the chart form encourages readers to take an overly simplistic view in which the market cares about one and only one business metric (Ebitda). The reality is that the market value contains information about Ebitda plus lots of other factors, such as competitors, growth potential, etc.

Consider Alphabet vs AT&T. On this chart, both companies have about $50 billion in Ebitda profits. However, the market value of Alphabet (Google's mother company) is about four times higher than that of AT&T. This excess valuation has nothing to do with profitability but partly explained by the market's view that Google has greater growth potential.

***

Unusually, the desginer chose not to utilize the log scale. The right side of the following display is the same chart with a log horizontal axis.

The big market values are artificially pulled into the middle while the small values are plied apart. As one reads from left to right, the same amount of distance represents more and more dollars. While all data visualization books love log scales, I am not a big fan of it. That's because the human brain doesn't process spatial information this way. We don't tend to think in terms of continuously evolving scales. Thus, presenting the log view causes readers to underestimate large values and overestimate small differences.

Now let's get to the main interest of this chart. Notice the bar chart shown on the top right, which by itself is very strange. The colors of the bar chart is coordinated with those on the scatter plot, as the colors divide the companies into two groups; "media" companies (old, red), and tech companies (new, orange).

Scratch that. Netflix is found in the scatter plot but with a red color while AT&T and Verizon appear on the scatter plot as orange dots. So it appears that the colors mean different things on different plots. As far as I could tell, on the scatter plot, the orange dots are companies with over $30 billion in Ebitda profits.

At this point, you may have noticed the stray orange dot. Look carefully at the top right corner, above the bar chart, and you'll find the orange dot representing Apple. It is by far the most important datum, the company that has the greatest market value and the largest Ebitda.

I'm not sure burying Apple in the corner was a feature or a bug. It really makes little sense to insert the bar chart where it is, creating a gulf between Apple and the rest of the companies. This placement draws the most attention away from the datum that demands the most attention.