Designing Effective Graphs *

Actuaries, like other business professionals, communicate quantitative ideas graphically. Because the process of reading, or decoding, graphs is more complex than reading text, graphs are vulnerable to abuse. To underscore this vulnerability, we give several examples of commonly encountered graphs that mislead and hide information. To help creators design more effective graphs and to help viewers recognize misleading graphs, this article summarizes guidelines for designing graphs that show important numerical information. When designing graphs, creators should: (1) Avoid chartjunk (2) Use small multiples to promote comparisons and assess change (3) Use complex graphs to portray complex patterns (4) Relate graph size to information content (5) Use graphical forms that promote comparisons (6) Integrate graphs and text (7) Demonstrate an important message (8) Know the audience. Some of these guidelines for designing effective graphs, such as (6), (7) and (8), are drawn directly from principles for effective writing. Others, such as guidelines (3), (4) and (5), come from cognitive psychology, the science of perception. Guidelines (1) and (2) have roots both in effective writing and in graphical perception. For example, the writing principle of brevity demonstrates how eliminating pseudo three-dimensional perspectives and other forms of chartjunk improve graphs. As another example, the writing principle of parallel structure suggests using small multiple variations of a basic graphical form to visualize complex relationships across different groups and over time. To underscore the scientific aspect of graphical perception, we examine the process of communicating with a graph, beginning with a sender’s interpretation of data and ending with a receiver’s interpretation of the graph. In keeping with scientific tradition, this article discusses several studies in the literature on the effectiveness of graphs. We conclude that the actuarial profession has many opportunities to improve its practice, making communication more efficient and precise. 54 NORTH AMERICAN ACTUARIAL JOURNAL, VOLUME 2, NUMBER 2 Graphs do more than merely state an idea; they demonstrate it. Graphs are powerful because they are flexible, but flexibility can be a disadvantage because of the potential for abuse. Well-accepted references dealing with methods of quantitative data presentation mitigate opportunities for abuse. The Chicago Manual of Style (1993), a standard reference, discusses presentation of in-text data, and Ehrenberg (1977) and Tufte (1983) discuss presentation of tabular data. In contrast, we focus on data presentation through graphical displays. This article seeks to improve actuarial practice as it relates to graphical displays. We intend to: (1) demonstrate the importance of graphical displays, (2) provide guidelines to improve graphical practice, and (3) introduce some of the scientific underpinnings of good graphical practice. The agenda is ambitious, yet the goal of this article is to provide practicing actuaries with basic tools that they can use to become critical consumers and effective producers of graphs. We also hope that readers will adopt our enthusiasm and wish to explore the graphical design literature on their own. An important theme of this article is that principles of vigorous writing can and should be applied to the practice of making effective graphs. The Elements of Style (Strunk and White 1979, p. xiv) summarizes vigorous writing: Vigorous writing is concise. A sentence should contain no unnecessary words, a paragraph no unnecessary sentences, for the same reason that a drawing should have no unnecessary lines and a machine no unnecessary parts. This requires not that the writer make all his sentences short, or that he avoid all detail and treat his subjects only in outline, but that