Public Policy Modeling Systems Thinking: Causal Loop Diagrams Friday, November 23, 2018 Hun Myoung Park, Ph.D. Public Management & Policy Analysis Program Graduate School of International Relations

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.

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

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

Electrical Energy System

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

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

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.”

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).

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)

Drawing a CLD 5

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.

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)

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

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”

An Example of CLD 2

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

An Example of CLD 4 Then ask, “What caused bank’s solvency?” Keep asking similar questions

An Example of CLD 5

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.

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.

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)

Feedback Loop 4

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?

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

Reinforcing Feedback Loop 2

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

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

Balancing Feedback Loop 2

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).

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)

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).

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 33

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

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.