Aviva Investors

The Little Book of Data

Visual vignettes to help us better understand the world and provoke thought.

Igor Stravinsky once said: “To listen is an effort, and just to hear is no merit. A duck hears also.” It is the same with seeing. We can observe at a superficial level, but not necessarily understand.

Below is a glimpse of the second edition of The Little Book of Data. We are indebted to the permissions granted throughout; Alexander Radtke’s Warning Stripes stands out as a particular gem. 

While we cannot remove the effort involved with seeing and understanding, by paying more attention to visual representations of data we can reduce some of the burden –particularly as the information age continues to drown us all.

Boring, made beautiful. The attention to detail and tenacity is commendable.
Damian Totman, Global Creative Director, Bloomberg.

To receive your copy of The Little Book of Data, please complete the form at the end of this article.

The world divided into four with equal population

This chart draws us to the obvious, but hugely important, reality of global population density: Southeast Asia is home to a significant slice of the world's population. Over the course of the next century, demographers predict that Africa's population will grow significantly.

Global population

Source: Minas Giannekas, MapChart.net

Data that lies beneath

Content providers – Google, Facebook, Amazon and Microsoft – have invested in fibre-optic undersea cables at an unprecedented scale. Between 2013 and 2017, they added capacity at a compound annual rate of at least 75 per cent. In 2018, Google became the first non-telecom company to privately own an intercontinental cable.

The implications are far-reaching. Big Tech already controls a vast amount of data underpinning the global economy. What happens when these companies also control the infrastructure to carry that data?

Data that lies beneath

Source: TeleGeography; www.telegeography.com

Warning stripes

Part-inspired by Ed Hawkins' Warming Stripes, Alexander Radkte's Warning Stripes take the backward-looking visual of global average temperatures and projects forward based on the Shared Socioeconomic Pathways (SSPs). Whichever way you look at things, our futures' could be pretty bleak unless we change our behaviours quickly and start to mitigate and adapt far more seriously.

Warning stripes

Source: Stylised global mean temperatures 1900-2100. Design by Alexander Radtke.
Data and methodology on www.warningstripes.com

Note: Shared Socioeconomic Pathways (SSPs): Exploring different ways the world might evolve in the absence of climate policy and how different levels of climate change mitigation could be achieved when the mitigation targets of RCPs are combined with the SSPs.

Dendrochronology

The US has more immigrants than any other country. About 44 million people living there were born in another country, accounting for one in five of the global migrant population in 2017.

As indicated in this dendrochronology diagram, which treats each decade of immigration history in the US as a tree ring, the numbers swelled in the decades following the 1965 Immigration Act. (Previous policies were based on a national quota system.)

Not only did the rings become wider, but also more colourful, as immigrants arrived from a broader variety of countries in Asia, the Middle East and Latin America. They also favoured settling in the west and south over the north and northeast, with California and Texas receiving the highest immigrant population and New York a close third.

With the Trump administration’s immigration policies, though, the next decade could look very different.

dendrochronology

Source: Pedro Cruz, John Wihbey, Avni Ghael and Felipe Shibuya. Co-Lab for Data Impact, College of Arts, Media, and Design (CAMD), Northeastern University

Sequence of returns risk

How to best convert assets into income from long-term savings? Nobel Prize winner Professor William Sharpe described this as “the nastiest, hardest problem in finance”.

The problem for investors is that future ‘unknowns’ – like the pattern of returns – can lead to radically different outcomes. Drawing down on an illustrative portfolio invested in the S&P 500 (shown in yellow) or on a portfolio with returns stated in reverse order (in blue) can lead to materially different results. The order of returns matter as early losses can be hard to recover from.

Sequence of reurns

Source: Aviva Investors, Bloomberg, Returns from 1st January 1973 – 31st of December 2008

Dangerous anthropogenic interference

Just what you need – another acronym. Although there is no clear definition of what constitutes a DAI, it is pretty clear we achieved it. It is widely accepted that DAIs apply to events dramatic enough to cause the destruction of entire ecosystems, mass extinction or disrupt the world’s food supply.

Take a look at the chart and make your own conclusions about our impact as humans.

The amount of carbon dioxide (CO2) in the atmosphere varies, tending to cycle between 180 and 300 parts per million. CO2 levels have risen dramatically since the industrial revolution. Humans’ disruption of the carbon cycle means higher average temperatures and greater extremes.

Dangerous anthropoge

Source: NOAA NCDC Paleoclimatology Program, 2008, cited by Professor Chris Budd in “The Mathematics of Climate Change” 13 November 2018. 2019 data: NOAA, reported in EarthSky, 17 June 2019

Melting ice caps - A

Sea ice volume is an important and telling climate indicator as it depends on both ice thickness and extent.

Although it is expected for sea ice volume to follow a certain cycle of increase and decrease during any given year, its continuous decline over the last 40 years has been extraordinary, losing close to two thirds of its 1979 volume.

Melting ice caps chart

Source: Zachary M. Labe, Pan-Arctic Ice Ocean Modeling and Assimilation System (PIOMAS, Zhang and Rothrock, 2003)

Melting ice caps - B

The geopolitical implications are huge as overwater shipping routes have slowly replaced icebreaker shipping routes.

Melting ice caps map

Source: NGA, NSIDC, NOAA

Equities

Corporate intangible investments are on the rise.

Differences in the accounting treatment of tangible and intangible investments affects the size of companies’ balance sheets, but can also have a meaningful impact on reported earnings. Efforts to compare companies merely on the basis of price-to-earnings ratios have therefore become more complicated.

Equities

Source (left): Andrew Smithers, Productivity and the Bonus Culture. www.smithers.co.uk
Note: NIPA = National Income and Product Accounts.

Source (right): “Non-GAAP EPS―Intangible Amortization: To Expense or Not to Expense?”, Credit Suisse: HOLT® Accounting & Tax, 14 August 2019

Illiquidity premium

Investing in private assets has historically been capable of higher returns than from publicly traded ones of broadly similar credit quality and maturity. This is often called the illiquidity premium and reflects the fact that private assets are not available to trade
on an exchange.

The data highlights the range and diversity of off-market assets. Premia have narrowed since the end of 2018 when public spreads widened, but opportunities still exist to add value through these specialist transactions.

Illiquidity premium chart

Source: Aviva Investors, 31 October 2019

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