Checking out the New York Times’s infographic on the housing bubble, I thought “wow! Look at how much prices climbed!”. Then I read the fine print and realized they’ve completely distorted the vertical scale to make the increase look enormous.
The Y-axis is the house price. 100=the 1987 price of a house, so if in 1992 the line of the graph is at 92 then a house that sold for $100,000 in 1987 sells for $92,000 in 1992. The problem is that it’s about an inch from $0 (the bottom of the graph) to $100,000. But then each inch on the Y-axis corresponds to about $10,000 in price gain. In effect, they’ve zoomed in on the area from 100-150 and magnified the growth in the last 15 years.
I’m the first to say the housing market was overinflated and is now crashing—I took a bath when I sold my house in Colorado—but shame on the NYT for using misleading graphics to build its case. Perhaps they should invest in a copy of Darrell Huff’s magnificent How to Lie with Statistics—on page 62 this exact issue is illustrated and decried.