Public Policy Modeling

Systems Thinking:Causal Loop Diagrams

Thursday, April 20, 2023

Hun Myoung Park, Ph.D.

Public Management & Policy Analysis ProgramGraduate School of International Relations

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Systems Thinking

• Emphasis on interactivity and dynamics of activities.

• Introductory work in system dynamics

• To describe the structure of a system (physical and non-physical system)

• To produce a causal map or causal loop diagram.

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Causal Loop Diagram 1

• A CLD or causal map depicts the structure of a system or a set of causal relationships among variables (activities) in a system

• Used in system dynamics

• But general tool to describe concepts (systems) and communicate with others

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Causal Loop Diagram 2

• Components of CLD are• Variables of a system• Cause-and-effect relationships among

variables• Feedback loop is a closed circuit of the

interconnection between variables• Delay

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Electrical Energy System

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Causal Loop Diagram 3

• Variables of a system. – Interdependent (→ V →)– Dependent (→ V), independent (V →)

• Cause-and-effect relationships– “S” or + for the same direction – “O” or - for the opposite direction

• Feedback loop – “R” for reinforcing feedback– “B” for balancing feedback

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Drawing a CLD 1

1. Identify a systemic problem that is chronic and recurring and has a history and/or pattern.

2. Set a boundary and level of simplicity

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Drawing a CLD 2

3. Identify key variables (activities) that are significant events or phenomena that jointly influence the overall system.

– Use nouns or noun phrases– Include “the level of,” “the amount of,”

“the number of,” or “the size of,” if possible.

– Use a neutral or positive term. Avoid such words as “failure” and “increase.”

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Drawing a CLD 3

4. Begin with more interesting variable (activity) and

– Work backward (begin with an event and look for its cause)

– Work forward (begin with an event and look for its consequence)

– Move back and forth (both directions).

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Drawing a CLD 4

5. Indicate “cause-and-effect” relationship using a link and arrow.

– A departing point influences the destination (A→B).

– No bi-directional arrow allowed (A↔B). – Instead, use separate arrows (A→B, B→A)

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Drawing a CLD 5

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Drawing a CLD 6

6. Indicate the type of the relationship between two variables on the link.

• + or S (same direction) means a positive relationship between two variables. If A increases, B will increases; if A decreases, B will decreases.

• - or O (opposite direction) indicates a negative relationship. If A increases, B will decrease; if A decreases, B will increase.

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Drawing a CLD 7

7. Delay means that it takes long time for an cause results in its effect.

– Depicted by || or “Delay” on the link– “[M]ake system’s behavior unpredictable

and confound our efforts to control that behavior.” (Anderson & Johnson,1997, p.57)

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Drawing a CLD 8

8. If a link between two variables is not clear, redefine the variables or insert an intermediate variable between the two.

9. Keep revising iteratively; No CLD is ever ending. Begin with a simple CLD and try more challenging one incrementally.

10. Label feedback loop with either “R” for reinforcing or “B” for balancing

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An Example of CLD 1

• “Work backward” begins with the important effect and then seeks subsequent cause-effect chains.

• “Begin at the beginning” or work forward

• “Go back and forth”

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An Example of CLD 2

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An Example of CLD 3

• Bank failure as a system problem

• First ask, “What caused the bank failure?”

• Probably “bank’s solvency” is the cause of “bankruptcy (bank failure).”

• What is the relationship between the two variables? When bank’s solvency is low, bank failure is more likely (high). – or O

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An Example of CLD 4

• Then ask, “What caused bank’s solvency?”

• Keep asking similar questions

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An Example of CLD 5

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Feedback Loop 1

• A feedback loop is a closed circle of interconnection between variables or a series of mutual cause and effect (causal relationships).

• Mutual causation is the simplest feedback loop. A→B→A→B→…

• The loop is internally initiated by the system and insensitive to environment.

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Feedback Loop 2

• A closed circle requires that an activity influences (comes back to) itself eventually.

• Initial cause and ultimate consequence is NOT distinguishable clearly.

• Given endless cause-effect chains, such distinction is almost meaningless in most circumstance.

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Feedback Loop 3

• “[E]verything is indeed connected to everything else, so, in principle, it doesn’t matter where you start” (Sherwood, 2002: 128).

• “[C]ycling back means that what was originally a cause is now suddenly an effect” (Weick, 1979: 77).

• “[A]ny change made anywhere will eventually itself be changed by the consequences it triggers” (Weick, 1979: 77)

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Feedback Loop 4

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Feedback Loop 5

• The interdependent relationships in a structure (system) are more important than initial cause or starting point.

• Structure characterizes the system and starting point does not matter.

• Reinforcing feedback loop?• Balancing feedback loop?

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Reinforcing Feedback Loop 1

• A reinforcing or positive feedback loop • A feedback loop with even number of negative

signs (-) or O (i.e., 0, 2, 4, …). • Depicted by “R” or “+” in the center of a

feedback loop• Self-reinforcing feedback • Deviation amplifying feedback.

• No regulation or control

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Reinforcing Feedback Loop 2

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Reinforcing Feedback Loop 3

• “Reinforcing loops can be seen as the engines of growth and collapse” (Anderson & Johnson, 1997: 54).

• Destabilize the system and deviate from its equilibrium

• Form a vicious circle or virtual circle

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Balancing Feedback Loop 1

• A balancing or negative feedback loop• A feedback loop with odd number of negative

sign (-) or O (i.e., 1, 3, 5, …).• Depicted by “B” or “-” in the center• Goal seeking feedback, stabilizing feedback,

deviation-counteracting, or self-refraining feedback

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Balancing Feedback Loop 2

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Multiple Feedback Loop 1

• What if there are multiple feedback loops in a system? Some loops are balancing, while others are reinforcing

• If “loops are of unequal importance,” then ask, “Which feedback loop is dominating in the system?”

• Such dominating or the most important loop will determine the fate of the system in the end (Weick, 1979: 74).

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Multiple Feedback Loop 2

• “[T]he greater the number of inputs to and/or outputs from an element, the more important that element is” (Weick, 1979: 75).

• “[C]lose loop that contains the greatest number of these important elements” (Weick, 1979: 75-76)

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Multiple Feedback Loop 3

• What if there is no dominant feedback loop? All feedback loops are equally important.

• Count the number of balancing or negative feedback loops

• Count the total number of negative relationships (whenever it appears in a loop)

• An odd number indicates a balancing or deviation-counteracting system

• An even number indicates deviation-amplifying system (Weick, 1979: 76).

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Multiple Feedback Loop 4

In a Loop In a System

Presence of a influential loop

No influential loop

# of negative relationships between activities

Follow the type of the influential loop

# of negative or balancing loops in a system

If odd number, balancing loop

If odd number, balancing system

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How To Change a System?

• Add/delete activities (new system)• Change in a relationship from – (opposite) to +

(same direction) • Change in a relationship from – (same) to -

(opposite direction)• Add/delete some relationships• Shock (external input) will be decayed without

changing the structure of a system

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References

• Anderson, Virginia, and Lauren Johnson. 1997. Systems Thinking Basics: From Concepts to Causal Loops. Waltham, MA: Pegasus Communications.

• Sherwood, Dennis. 2002. Seeing the Forest for the Trees: A Manager. London: Nicholas Brealey Pub.

• Weick, Karl E. 1979. The Social Psychology of Organizing. 2nd ed. Reading, MA: Addison-Wesley Pub. Co.