Public Policy Modeling

Systems Thinking:
Causal Loop Diagrams
Tuesday, September 12, 2017

Hun Myoung Park, Ph.D.

Public Management & Policy Analysis Program

Graduate School of International Relations
Software to build CLD for system analysis
Vensim PLE (free): http://vensim.com
STELLA (free 30 days trial):
http://www.iseesystems.com/softwares/Education/StellaSoftware.as
px
AnyLogic (free trial): http://www.anylogic.com/
https://www.researchgate.net/post/Can_anyone_suggest_software_t
o_build_causal_loop_diagrams_for_system_analysis
Insight Maker (https://insightmaker.com/features)
SistemiTool: http://www.boardmansauser.com/thoughts/system_ito
ol.html
Simile (http://www.simulistics.com/)
Axon (http://web.singnet.com.sg/~axon2000/)

https://www.youtube.com/watch?v=Wvsmico0yEs
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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
Demand
O

S
Price
O

S S
S
Nuclear Energy Supply Other Energy
S
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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
(AB).
No bi-directional arrow allowed (AB).
Instead, use separate arrows (AB, BA)

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Drawing a CLD 5
Effect 0
S

Cause 0

Cause 1

O
Effect 1

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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 systems 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
Bank Failure
?

Bank Failure
O
?

Bank Failure
O
Bank's Solvency

Bank's Solvency

Withdrawals of
Funds

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 An Example of CLD 3
Bank failure as a system problem
First ask, What caused the bank failure?
Probably banks solvency is the cause
of bankruptcy (bank failure).
What is the relationship between the two
variables? When banks solvency is low,
bank failure is more likely (high). or O

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 An Example of CLD 4
Then ask, What caused banks
solvency?
Keep asking similar questions

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 An Example of CLD 5
Bank Failure
O

Bank's Solvency Depositors'

Confidence
O

Bank Failure
O
Withdrawals of O
Funds

Depositors'
Bank's Solvency
Confidence
O

Withdrawals of O
Funds
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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. ABAB
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 doesnt 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
Bank Failure
O

Depositors'
Bank's Solvency R (+)
Confidence
O

O
Withdrawals of
Funds
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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
Birth S

O
Population
S

B (-)

Death
S
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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 No influential loop
influential loop
# of negative Follow the # of negative or
relationships type of the balancing loops
between influential loop in a system
activities
If odd number, If odd number,
balancing loop 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.
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