Scary Info Graphic

In a comment to my post How to Make a Donut-Pie Combination Chart, Sjoerd Hoogwater pointed me to Scary Bailout Money Info Graphic. The post features information about the federal bailout of the banking industry, but I don’t know what’s scary, the bailout money or the info graphic. In this scary post, Wade took data from Boing Boing’s Cory Doctorow (Bailout costs more than Marshall Plan, Louisiana Purchase, moonshot, S and L bailout, Korean War, New Deal, Iraq war, Vietnam war, and NASA’s lifetime budget — *combined*!), whe got it from Barry Ritholtz, Big Bailouts, Bigger Bucks, and made this outstanding example of why pies are bad, and why two pies are worse than one:

pie chart of credit crisis bailout

There are a few things to note about this chart.

First, Wade ironically states, “There’s not much I like more than a good info graphic.” Well, this is not much like a good info graphic.

Second, the note under the chart states, “Pie charts are to scale.” This is the warning that there is actually some kind of relationship between the two pies, or rather, the pie and the featureless disk. It turns out that the areas of each disk are proportional to the total dollars represented by each disk. Given the perspective, I would have simply assumed that the two disks have the same diameter, but the left one is floating in space closer than the right hand one. However, without my 3D glasses, it’s really hard to make out the 3D details. I guess I need a floating ruler to measure the diameters.

A third point: Why are the Marshall Plan through NASA data points plotted as if they are the total of some logical set of points? They are separated in time, each being part of one or several years’ budget, and I’m sure none of these are more than a small part of the budgets they are drawn from. They shouldn’t be represented by a pie at all.

A minor point, which is not Wade’s fault, concerns the NASA budget. The table is double-dipping, because the cost of the race to the moon is part of NASA’s total budget.

If we want to show just how large the bailout is compared to the other large expenditures, there’s nothing like a bar chart.

bar chart of credit crisis bailout

Now we can see just how large the credit crisis bailout is compared to these other large expenditures. It’s more than 5 times as great as the total NASA budget for all time. To be fair, all of these minor expenditures weree spread out over several years. The only other one-year expenditure was the Louisiana Purchase, smaller than 1/20 of the bailout. Wow. I wonder if we can trust these numbers.

So I decided it was time for a sanity check. I recall hearing numbers on the order of $700 billion, so I Googled ‘bailout as percentage of budget’. I found a quiz in the online Seattle Times, Globalist quiz: Sizing up the bailout, which asked the question:

What is the bailout package equivalent to in dollar terms?
A. U.S. defense budget
B. U.S. trade deficit
C. U.S. oil imports
D. A stack of $1 bills 52,000 miles high

The answer was a bit surprising, since three of the choices were true.

A. Military spending in Fiscal 2008 is $671 billion, and this is expected to rise to at least $700 billion in 2009. True.

B. The US trade deficit reached about $700 billion in October 2008. True.

C. US Spending on oil imports is heading toward $500 billion. False.

D. A stack of 700 billion dollar bills would be worth $700 billion. True.

Very interesting. The $700 billion amount has been in the news for weeks, but I don’t know where the figure of $4.6 trillion came from. Cory Doctorow’s Boing Boing profile describes him first as a science fiction writer, but he got the data from Barry Ritholtz, who appears on CNBC. I’m not pretending to understand these numbers, but the figure in the trillions includes “commitments, loans, and pledges of backing”, which I guess includes how much the taxpayers will be out if all of the loans default.

This whole economic discussion is pretty far away from Wade’s pie charts. Here is why the bar chart is better:

  • There is no need to guess the relative diameter or area of the two disks.
  • There is no valid reason to combine a number of arbitrary items together into a pie chart.
  • The bar chart allows comparison of any of the items in the chart, without having to correct for circle diameter and wedge angle.

Unfortunately the bar chart I proposed uses nowhere near as many colors as Wade’s art project, and it only uses two dimensions.

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Comments

  1. Jon, since the point of the original chart is to compare all of those events to the bailout, is there a way to take the bar chart and stack on one bar everything from NASA’s budget down?

  2. Jimmy –

    I had made the following chart, then decided not to show it, because (a) I thought it was not a valid analysis, and (b) nobody seems to know quite where the $4 trillion figure came from. (When looking for the source of the bailout figures, there were many mentions of the $700B initial figure, several mentions of $800B, and then a wild bunch of numbers ranging from $2 to $9 trillion, which included speculation on future obligations and other unknowable amounts.

    Anyway, here’s the chart, in the form of a floating bar chart, like a waterfall.

    cumulative bar chart of credit crisis bailout

    Here’s another version, my attempt to show that the moon shot should be included in the NASA total. For reference, the $700B for the race to the moon is the size of the initially published bailout. The correction I’ve made by not counting this value twice is roughly an order of magnitude less than the uncertainty in the “actual value” of the bailout.

    cumulative bar chart of credit crisis bailout

  3. If that 4.6bn figure was pulled out of thin air (or worse ;), the whole analysis is pointless – no amount of chart surgery will help. You can’t chart around imaginary data.

    But I wanted to comment on the same thing JP said above: your initial bar chart completely misses the point of the original. Those two pie charts were picked to make a specific point about the “*combined*!” part of the headline. The “featureless disk” shows you how much *only* the bailout is, compared to all those great (or at least expensive) things in the past *put together*. That’s not just about charting, this is making a point.

    I’m not going to argue for the pie chart here, even though it’s arguably of no importance to be able to tell wether the Korean War or the New Deal cost more (the comparison makes no sense). A simple stacked bar chart next to a “featureless” bar would have worked as well, or perhaps a waffle chart (which to me says “this is a total made up of these parts” – not necessarily that they belong together). But in any case, you have to stay true to the point the original tried to make.

  4. Robert –

    I thought the “combined” cost of all the other expenditures was no more realistic than the cost of the bailout, and that combining them was somewhat irrelevant. Silly, even. But I did relent and post the floating charts in my previous comment. The waterfall approach is better than a simple stacked bar, because it makes labels easier to read, while still showing the combined total.

  5. Strictly looking at the data visualization and not arguing the numbers:

    I like the horizontal waterfall chart for the exact three reasons Jon points out above. The only downside is that typically a waterfall charts builds up to the final amount. In this example, the “Other” projects add up to 3.9 trillion and need to be compared to the 4.6 billion amount. Maybe using a different color for the other projects would help to differentiate them.

    Obviously, the pie charts are junk and provide no value for analysis other than, WOW the bailout is bigger than all of the other projects combined. Too much space is wasted to get to that conclusion.

  6. Sjoerd Hoogwater says:

    That waterfall chart looks a lot better to me than the pies. I liked the original bar chart, too, because it emphasizes how much bigger the bailout is than any of the others.
    Here are a few links explaining the source of the 4.6 trillion dollars (which itself is already out of date):
    http://globaleconomicanalysis.blogspot.com/2008/11/bailout-pledges-hit-77-trillion.html
    http://www.bloomberg.com/apps/data?pid=avimage&iid=i0YrUuvkygWs
    http://www.ritholtz.com/blog/2008/11/big-bailouts-bigger-bucks/#comment-128739

    Even though the numbers are based on loans that are now taken over by the government, which surely are not all going to default, 77 trillion is a staggering amount:

    “$7.76 trillion, or $24,000 for every man woman and child in the country”
    … that’s 4452.7 Big Mac meals @ $5.39 each for every man woman and child in the country.
    … that’s a 2009 Chevrolet Malibu 4-door HYBRID Sedan for every man woman and child in the country.
    … that’s 33.4 “average U. S. median monthly housing costs” for every man woman and child in the country.
    … that’s 12,766 gallons of regular gasoline for every man woman and child in the country.
    … that’s 323,944 more CEO’s at an average 2007 annual salary of $14.2 million each.
    … that’s 373,983,739 pounds of gold @ $820/0z.

    (comment 128795 from the above referenced thread)

  7. Jon, I went to check this blog earlier and a simple white screen popped up with only the words “you are banned”. Thanks for letting me back in!

    I’d go with JP’s suggestion of a stacked bar (moon shot, etc.) v. whole bar (bailout) to make the original point. It allows you to combine the 2 stacks of money, and doesn’t emphasize the comparison of the individual amounts like the pie (or the waterfall) does.

  8. If this chart is supposed compare the relative cost impact on the economy shouldn’t the metric be percent of US GDP for comparable period of expenditures?

  9. Robert Williams says:

    I can’t reconcile $4 trillion, but I can add a little clarity. First, $700 billion refers to the congressional bailout package that was much-discussed in the media. $800 billion is the amount of liquidity the Federal Reserve announced it was injecting from its reserves last week. The rest is a combination of various specific bailouts – Lehman, Citi etc. that seem, back-of-envelope, more like $3 trillion to me. I suspect to get to $4.6t they’re including other proposed/discussed/imagined potential bailouts with, shall we say, very imprecise cost estimates.

    I think the point about the bailout’s scale is valid, but it is being argued unconvincingly by people who don’t have a great grasp of the quantitative measures they’re using. That pie chart looks like a poster for a UFO convention! Thanks for posting, I’ve enjoyed this.

  10. Sjoerd – I saw some of those links, and they all just seem to be pulling numbers out of a hat.

    Doug – Someone else had trouble with the “banned” screen. I added a plugin that blocks IPs from which I’ve gotten comment spam. Neither of you are coming from a banned IP. If it happens one more time, that plugin is history. Better deal with a little spam than keep out legitimate visitors.

    Bob G – the numbers are supposedly converted to 2008 dollars, but I agree that fraction of GDP would make more sense.

    Robert – Thanks for trying to clear this up. The numbers are so vast, though, that I think we need one of those powers of ten videos to help.

  11. Perhaps one more statistic might be included here – the estimated cost of WW2. The figures that I have seen put the total expenditure at about $5 trillion in current dollars (a moving target, I know).

    JM

  12. Where do you get 217 Billion for the Lousiana Purchase?

    1800 15M, or 15million OZ of Silver
    2008, current spot of silver 11.42

    Total=173 Million (give or take)

  13. Droo –

    I got the numbers from Barry Ritholtz in Big Bailouts, Bigger Bucks. I don’t know how he computed the figure in the chart.

    According to MeasuringWorth, based on the Consumer Price Index the Louisiana purchase price of $15M would now be worth $278M, a fraction of one percent of the value Ritholtz calculated.

  14. Jon, Isn’t that last amount for the moon race, of $698B, a misprint? The other graphs have it as $237B, which makes more sense.

  15. Jon, your bar charts are very telling (especially those you posted on Dec. 2).

    But how about adding in WWI and WWII?

  16. Lester –

    Good catch. I changed the bars, but the labels were still in the same positions as in the previous chart. Took less time to fix the chart than to upload the new image to the server.

  17. Tom –

    There are probably a lot of huge expenditures I could add to the chart. My purpose in creating the bar charts was to try to improve on the scary double pie chart.

    Presumably spending on the two World Wars would be greater than Korea and probably Vietnam (though we were involved in Vietnam for a long time). And some of the numbers should be vetter more carefully, since we now know the bar for the Louisiana purchase should be no thicker than the line used to draw the axis.

    I welcome anyone who is inclined to improve on these charts by incorporating better data.

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