Causal Loop Diagram Simulation & Modeling

Kardi Teknomo, PhD

Some of the materials in this slide are my summary from Principle of System by Jay W. Forrester, Productivity, 1971

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Overview

Review C Causal l Loop L Diagram Di (CLD) Step in developing CLD Examples Case Study Discussion

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Objective

By the end of this lesson you should be able to draw Causal Loop Diagram

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1. Review Classification of Systems

System:

O Open system: t
Past action does not control future action

Feedback or Close systems:

Past action controls future action

Positive feedback loop Negative g feedback loop p

Depend on observers viewpoint

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2. Causal Loop Diagram (CLD)

Cause and effect relationship between variables in the system can be represented as a causal diagram Cause & effect: If A then B A B

influences

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Feedback Loop

If A causes or affects B, then in many ways B is going to affect A ways, A. This circular causality is called feedback loop Which one first, chicken or egg? A B

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Causal Loop Diagram (CLD)

CLD is also called Influence diagram CLD represents t th the feedback f db k structure t t of f systems Capture p

The hypotheses about the causes of dynamics y The important of feedbacks

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3. Steps in Developing CLD

List components of system D t Determine i th the system t b boundary d Draw influence of component over the other parts Search feedback loop p Label link polarity Label loop polarity

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Critical Aspects

Thinking in terms of cause-and-effect relationships Focusing on the feedback linkages among components of a system Determining the appropriate boundaries for defining what is to be included within a system

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Guidelines

Focus on the relationship rather than the parts: see how the structure influence behavior S patterns, See tt not t events t Use circular causality: in time, causality is seldom one way (after delay) Add p policy y variables

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Search for Feedback Loop

Thinking in terms of cause and effect is not enough

ocean evaporation cloud rain ocean

Feedback: an initial cause ripples through a chain of causation ultimately to re-affect itself S Search h to t id identify tif closed, l d causal l feedback f db k loops l The most important causal influences will be exactly those that are enclosed within feedback loop

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CLD Examples

Salary VS Performance Salary Performance Performance Salary

Tired VS Sleep

Tired sleep Sleep tired

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Labeling Link Polarity

Signing: Add a + or a sign at each arrowhead to convey more information A + is i used d if the th cause increase, i the th effect ff t 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

effect ff t i increases

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Sign of Arrow Head

Positive sign indicate that higher the cause will produce higher effect, lower the cause will also lower the effect Negative sign in the arrow head means that higher the cause will produce lower effect, and lower the cause will create higher effect

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Signing Arcs

+
delay

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Determining Loop Polarity

You can easily distinguish positive and negative feedback loop from the multiplication of all arrow signs in the loop
delay

++ = + = + + = + =

delay

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Positive Feedback Loop

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, amplify, deviation, and reinforce Notation: place loop
+

symbol in the center of the

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Positive Feedback Loop

Salary Performance, Performance Performance Salary

The more salary I get The better I perform Th b The better tt I perform f The more salary I get

+ + +

Th more salary The l I get The better I perform

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The Arms Race

Two countries situation

+
A feels endagered

Armation A

+
B feels f l endangered d d

A Armation ti B

The result of the Arms Race

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Total Amount of Armation in Arms race

Time

(years)

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Start of an advertising war

Starting point

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The advertising war

The system structure causes its own behavior

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Negative Feedback Loop

Have an odd number of signs Tend to produce stable, balance, equilibrium and goal-seeking behavior over time Notation: place loop
-

symbol in the center of the

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Negative Feedback Loop

Tired Sleep, Sleep Tired

The more I sleep The less tired I am The less tired I am The less I sleep The less I sleep The more tired I am

The more tired I am The more I sleep

+ -

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Example Feedback loop

Student numbers

Staff stress levels

+
Student recruitment

Research papers published

+
Reputation of university

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A Balancing Loop
Student numbers

Staff stress levels

+
Student recruitment

Research papers published

+
Reputation of university

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Behaviour over time

Number of students

time

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Loop Dominance

There are systems which have more than one feedback loop within them A particular loop in a system of more than one p is most responsible p for the overall behavior loop 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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Combined Feedback Loops

Population Growth

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Learn to forget

Dynamics of organizational learning and forgetting

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4. More Complex Examples

Self-Regulating Biosphere

Evaporation clouds rain amount of water evaporation forms Nested Feedback Loops
+ + + + + +
+

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Exogenous Items

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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Delays

Systems often respond sluggishly From the example below, once the trees are planted the harvest rate can be 0 planted, 0 until the trees grow enough to harvest
delay

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5. Case Study

The following case study come from Prof Dr Prof. Dr. Gnther Ossimitz University of Klagenfurt, Austria Given the following g model, , what action do you think we can suggest?

Heroin Market 1

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Price Elasticity of Heroin

Tsd ATS
4000 pri ice per kg H Heroin 3000 2000 1000 0 0 1 2 3 4 5 6 kg Heroin available 7 8 9

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Price Elasticity Heroin-market

10

11

10 kg Heroin available: 1000 $/kg: 10 Revenue 9 kg Heroin available: 2000 $/kg: 18 Revenue !

Heroin Market 2

Kardi Teknomo, PhD

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Lessons from the Heroin Models

Causal Loop p Diagrams g (CLD`s) ( ) are useful tools! CLDs help to discuss a situation. Different viewpoints can be clarified and checked more easily. The same situation can be modeled in different ways. CLDs allow a reflection of model assumptions. Small differences in a model might g have serious consequences. What appears to be the solution at first sight, might (via feedback) make the problem even more severe!

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Summary

CLD is a qualitative model Can explore unanticipated side-effects, and identify performance indicators to flag up when these side-effects begin to be felt Cannot tell which loops will dominate without quantifying effects can be difficult and subjective

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6. Discussion Points

Define from your system:

System boundary Is it open or feedback system? Variables in the system How the variable influence other variable Can you change viewpoint to form feedback loops Put link & loop polarity Guess the system dynamic qualitative behavior

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Practice: Product Life Cycle

Can you explain the meaning?

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Practice: Housing Sector

How many feedback loop? P iti or negative? Positive ti ?

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Practice: Population Sector

What is the sign of S S and O O mean? What is the sign of R, , B and B2?