The Kauffman Index just released the Startup Activity Report 2017 this month. Wisconsin was ranked the last among 25 large states while California the first. What annoys me in the report is that they used truncated y-axis in all of the graphs. I’m not a fan of truncated y-axis. In my opinion, people who use truncated y-axis are trying to fool, if not to mislead, their audience.
Let’s take a look at the graphs.
Rate of New Entrepreneurs
The first one is the rate of new entrepreneurs. The y-axis was truncated at 0.16%. Since the data were all close to zero, it didn’t seem like a big problem with the truncation.
If the y-axis wasn’t truncated, the graph would look like the following. It clearly shows that the lowest point (2014) is about half of the highest point (2002). Also, we can see that the current rate is about two thirds of the highest rate in the past 18 years.
Opportunity Share of New Entrepreneurs
The second one is the opportunity share of new entrepreneurs. Since the y-axis was truncated at 66%, it seemed that the opportunity share of new entrepreneurs “vanished” after 2016.
Without truncating the y-axis, the decreasing trend was not so dramatic.
The last one is the startup density. It looked like the density started so high in 1977, in the 90’s the density decreased by half, and then in 2014 it’s almost gone.
After fixing the y-axis, the following graph shows that the current density is a little more than half of that in the 80’s or 90’s.
To me, different y-axes tells different stories. What do you think about the Startup Activity Report 2017? What’s your thought on using truncated y-axis? Please leave your comment below. I’d love to hear your thoughts.