System Dynamics: Causal Loop

Causal loop diagrams provide a language for articulating the understanding of the dynamic, interconnected nature of the system and its emerging properties. From a System Dynamics perspective Causal Loops Diagrams (CLD) are used to articulate models with the objective:

  • Understanding critical problems and potential leverage points
  • Elevating system capability and potentiality
  • Defying ideal system potential based on system purpose
  • Use CLD to identify critical variety attenuators and amplifiers

A causal loop diagram is a simple map of a system with all its constituent components and their interactions. By capturing interactions and consequently the feedback loops a causal loop diagram reveals the structure of a system. By understanding the structure of a system, it becomes possible to ascertain a system’s behaviour over a certain time period. Causal Loop is also fundamental in documenting systemic thinking in terms of cause and effect of related elements.

Causal Loop1

A diagram that shows causal links among actions, information, and consequences. Sometimes referred to as the influence diagram or directed graph.

Causal Loop Diagram is a useful way to represent interrelationships and system structure of the parts that make up the system.

System Archetypes

The Systems Archetypes are patterns of behaviour that emerge from the underlying system Structure. They can be used diagnostically to reveal insights into the structure that already exists, or prospectively to anticipate potential problems and/or problem symptoms.

Archetypes do not describe any one problem specifically. They describe families of problems.

generically. Their value comes from the insights they offer into the dynamic interaction of

complex systems.

System Archetypes are a class of tools that capture the “common stories” in systems thinking.

A powerful tools for diagnosing problems and identifying high leverage interventions that creates fundamental change.

Casual Loop fundamentally a qualitative method to understand how an element of the system seek equilibrium (pre-defined targets) or amplifies change (achieve desired objective):

  1. Reinforcing loop to amplifies change
  2. Balancing loop that seeks equilibrium over time by reaching target)

Characteristics of a causal loop diagram:

  • Defining cause and effect though sequence for the problem under study:
      • Logical (efficacy of government  management influence economic leverage)
      • Illogical (high level of corruption effect on government expenditure which influence taxation, high taxation influences disposable income which in turn influence private consumption
  • Variable – an element in a situation which may act or be acted upon that can vary over time
    • Vary up or down over time (not events) : Factory finished goods inventory
    • Nouns or nouns phrases. Avoid verbs and action phrases, the action is conveyed in the loop’s arrows: Safety Stock
    • Chose the more positive sense: usage of growth versus contraction
  • Links and arrows – shows relationship and the direction of influences between variables
  • S’s and O : shows the way one variable moves or changes in relation to other
    • S – Same direction (or + )
    • O – Opposite direction (or – )
  • Causal Loop Objects used for modelling

CLD08Feedback loops

  • B Balancing feedback loop that seeks equilibrium
    • Goal seeking feedback or balancing loop
    • Actions are directed toward an objective or target
    • Where feedback reduces the impact of a change
    • Have an odd number of “–” signs
    • Tend to produce “stable”, “balance”, “equilibrium” and “goal-seeking” behavior over time
  •  Reinforcing feedback loop that amplifies change
    •  Reinforcing loop
    • Vicious cycle or virtuous cycle
    • Growth generating mechanisms
    • Where feedback increases the impact of a change,
    • Have an even number of ‘–’ signs
    • Some quantity increase, a “snowball” effect takes over and that quantity continues to increase
    • Generate behaviors of growth, amplify, deviation, and reinforce
  • Think of the possible unintended consequences as well as the expected outcomes for every course of action included in the diagram. For example, an increase in “Production Pressure” may increase “Production Output,” but it may also increase “Stress” and decrease “Quality”.


  • All balancing loops are goal-seeking processes. Try to make explicit the goals driving the loop. For example, loop B1 may raise questions as to why increasing “Quality” would lead to a decrease in “Actions to Improve Quality” By explicitly identifying “Desired Quality” as the goal in loop B2, we see that the “Gap in “Gap in Quality” is really driving improvement actions.


  • Distinguishing between perceived and actual states, such as “Perceived Quality” versus “Actual Quality” is important. Perceptions often change slower than reality does, and mistaking the perceived status for current reality can be misleading and create undesirable results.


  • If a variable has multiple consequences, start by lumping them into one term while completing the rest of the loop. For example, “Coping Strategies” can represent many different ways we respond to stress (exercise, meditation, alcohol use, etc.)


  • Actions almost always have different long-term and short-term consequences. Draw larger loops as they progress from short-to long-term processes. Loops B1 show the short-term behavior of using alcohol to combat stress. Loop R2, however, draws out the long-term consequences of this behavior, showing that it actually increases stress.


  • If a link between two terms requires a lot of explanation to be clear, redefine the variables or insert an immediate term. Thus, the relationship between “Demand” and “Quality” may be more obvious when “Production Pressure” is inserted between them.


  • A shortcut determining whether a loop is balancing or reinforcing is to count the number of “o’s” in the loop. An odd number of “o’s” indicates a balancing loop (i.e. an odd number of U-turns keeps you headed in the opposite direction); an even number or no “o’s” means it is a reinforcing loop. CAUTION: After labeling the loop, you should always read through it to make sure the story agrees with your R and B label.


  • Loop Dominance:
    • There are systems which have more than one feedback loop within
    • 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
    • Example combined feedback


  • 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


  • Delays:
    • 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


  • Feedback cause and effect. An initial cause ripples through a chain of causation ultimately to re-affect itself


  • Causal Loop polarity:
    • 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 effect increases


  • Positive and negative feedback loops:
    • Positive feedback loops
      • Have an even number of ‘–’ or ‘+’ 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 CLD014    symbol in the center of the loop
      • Example: Salary > Performance, Performance > Salary


  • Negative feedback loops
    • Have an odd number of “–” signs
    • Tend to produce “stable”, “balance”, “equilibrium” and “goal-seeking” behavior over time
    • Notation: place  CLD017   symbol in the center of the loop
    • Example: Tired > Sleep, Sleep > Tired