3_Causal Loop Diagrams

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Economic Systems Modeling

Philip Asibu-Yartey


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` Most commonly used tool in the early stagesof system conceptualization.

`Also called influence diagrams, or directed

graphs.` Represent the feedback structure of systems

` Capture The hypotheses about the causes of dynamics

The important feedbacks within the system

`A diagram that shows causal links amongactions, information, and consequencesas captured in a given system

2Philip Asibu-Yartey - Economic Systems Modeling


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` They provide

Simplicity

Tool for communication Does not require intimate knowledge of the

quantitative modeling and simulation

techniques of SD



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Salary VS Performance

Salary Performance

Performance Salary

Tired VS Sleep Tired sleep

Sleep tired



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` Signing: Add a + or a sign at each

arrowhead to convey more information

`A + is used: if the cause increase, the effect

increases and if the cause decrease, the effect

decreases

`A - is used: if the cause increases, the effect

decreases and if the cause decreases, the effectincreases



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` Place the signs (+ or -) at the head or point of the

arrow.

Influencing

VariableInfluenced Variable

Positive Links

Negative Links



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+

+

+

-



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` Positive feedback loops Reinforcing loop

Vicious cycle or virtuous cycle

Growth generating mechanisms

` Negative feedback loops Goal seeking feedback or balancing loop

Actions are directed toward an objective or target

+

-



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` Positive feedback loops Have an even number of signs Some quantity increase, a snowball effect takes over and that

quantity continues to increase The snowball effect can also work in reverse

Generate behaviors of growth, amplification, deviation, andreinforcement Notation: place symbol in the center of the loop

` Negative feedback loops Have an odd number of signs

Tend to produce stable, balance, equilibrium and goal-seeking behavior over time Notation: place symbol in the center of the loop

+

-



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` Salary Performance, Performance Salary

The better I perform

The more salary I get



+

+

+





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Cry Depressed

+

+



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Depression Level

0

500

1000

1 3 5 7 9 11 13 15 17

Time

Depression

Depression Level

12PhilipAsibu-Yartey- EconomicSystems Modeling


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The more I sleep

The more tired I am

The more I sleep The less tired I am

The less I sleep

The more tired I am

The less I sleep The more tired I am

+

-

-

Tired Sleep, Sleep Tired



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Tired Sleep

+

- 14Philip Asibu-Yartey - Economic Systems Modeling


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Tiredness Level

0

5

10

1 3 5 7 911 13 15 17

Time

Tiredness

Level

Tiredness Level

15PhilipAsibu-Yartey- EconomicSystems Modeling


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` There are systems which have more than one

feedback loop within them

` A particular loop in a system of more than one loop is

most responsible for the overall behavior of that

system

` The dominating loop might shift over time

` When a feedback loop is within another, one loop

must dominate

` Stable conditions will exist when negative loops

dominate positive loops



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Birth rate -+

+ +

+ -



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-

+

-

+

+

+

+ +

+

+

+-

-

Evaporation clouds rain amount of water evaporation



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` Items that affect other items in the system but are

not themselves affected by anything in the system

` Arrows are drawn from these items but there are

no arrows drawn to these items

+

+

-

-



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` Systems often respond sluggishly

` From the example below, once the trees are planted,

the harvest rate can be 0 until the trees grow enough

to harvest

-

delay



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Services and Goods Needed Population Congestion of People & Buildings

Favorable Location



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New Highways Underconstruction

Need for New Highways

Number of New Highways

Attractiveness of Driving on Highways

Number of Traffic Jams



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Refer to the variables in the loop as

quantities that can rise or fall, grow or

decline, up or down. There is no need toknow how they can be quantified.

Use nouns or noun phrases and not verbs.

The actions are represented in the arrows.

Be sure that it is clear what it means to say, a variable increases (decreases).



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` Do not use causal links to mean and then

` Identify the units of the variables as much as

possible. If necessary, invent it.

` Phrase the variables positively.

` If a link needs explanation, disaggregate it and

make it a series of links.



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` Do not interpret open loops as feedback loops.

` The sign indicates whether the succeedingvariables increase (positive) or decrease

(negative), when the previous variable increases.` Keep diagrams simple to start with.

` Watch out for unintended effects.



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` Distinguish carefully between actual values andperceived values.

` When using a variable such as actual values,look for corresponding desired values.

` Be clear about the purpose of the model. Is itstrategic (top level), tactical, or a detailedoperational problem?



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` Have the purpose and target audience of the

diagram been carefully chosen?

` Are the factors chosen consistent with the

purpose?` The objective of SD is policy analysis, so are the

policies clearly shown in the diagram?



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` SD aims to produce policies which are robust

against a range of circumstances, so are the

exogenous factors which might present the

system with setbacks or opportunities clearlyidentified?

`Are the variables capable of being easily

explained to the target audience?

`Are these variables, in principle, capable ofbeing measured? Can they vary over time?



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` Does it capture the most significant insights? Wasit drawn after careful analysis?

` Can the diagram be drawn on a level lower orhigher without losing conceptual consistency?

` Is the diagram too complicated that it may fail tocommunicate?

` Is the diagram neat and tidy with minimum numberof lines crossing?

` Can feedback loops be clearly seen?` Do I understand the diagram myself before I try to

explain it to someone else or write about it?


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3_Causal Loop Diagrams