Economic Systems Modeling Philip Asibu-Yartey

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Most commonly used tool in the early stages of 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 among actions, information, and consequences as captured in a given system
Philip Asibu-Yartey - Economic Systems Modeling 2

` They provide Simplicity Tool for communication Does not require intimate knowledge of the quantitative modeling and simulation techniques of SD Philip Asibu-Yartey .Economic Systems Modeling 3 .

 Salary VS Performance  Salary Performance  Performance Salary  Tired VS Sleep   Tired sleep Sleep tired Philip Asibu-Yartey .Economic Systems Modeling 4 .

Economic Systems Modeling 5 . the effect decreases A µ-¶ is used: if the cause increases. the effect increases Philip Asibu-Yartey .` ` ` Signing: Add a µ+¶ or a µ±¶ sign at each arrowhead to convey more information A µ+¶ is used: if the cause increase. the effect decreases and if the cause decreases. the effect increases and if the cause decrease.

Influencing Variable Influenced Variable Positive Links Negative Links Philip Asibu-Yartey .Economic Systems Modeling 6 .` Place the signs (+ or -) at the head or point of the arrow.

+ + + - Philip Asibu-Yartey .Economic Systems Modeling 7 .

Economic Systems Modeling 8 .` 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 - Philip Asibu-Yartey .

a ³snowball´ effect takes over and that quantity continues to increase The ³snowball´ effect can also work in reverse Generate behaviors of growth. ³equilibrium´ and ³goalseeking´ behavior over time . ³balance´.symbol in the center of the loop Notation: place Philip Asibu-Yartey . deviation.Economic Systems Modeling 9 . amplification. and reinforcement Notation: place + symbol in the center of the loop ` Negative feedback loops Have an odd number of ³±´ signs Tend to produce ³stable´.` Positive feedback loops Have an even number of µ±¶ signs Some quantity increase.

Economic Systems Modeling 10 . Performance Salary The more salary I get The better I perform The better I perform The more salary I get + + + The more salary I get The better I perform Philip Asibu-Yartey .` Salary Performance.

Economic Systems Modeling 11 Depressed .+ Cry + Philip Asibu-Yartey .

Economic Systems Modeling 17 1 3 5 7 9 12 .Depression Level Depression Level Depression 1000 500 0 11 13 15 Time Philip Asibu-Yartey .

Economic Systems Modeling 13 . Sleep Tired The less tired I am The less I sleep The more tired I am The more I sleep The more I sleep The more tired I am The less I sleep The more tired I am + Philip Asibu-Yartey .Tired Sleep.

+ Tired Sleep - Philip Asibu-Yartey .Economic Systems Modeling 14 .

Tiredness Level Tiredness Level 10 Tiredness Level 5 0 1 3 5 7 9 11 Time Philip Asibu-Yartey .Economic Systems Modeling 17 13 15 15 .

one loop must dominate Stable conditions will exist when negative loops dominate positive loops Philip Asibu-Yartey .` ` ` ` ` 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.Economic Systems Modeling 16 .

+ + Birth rate + + - - Philip Asibu-Yartey .Economic Systems Modeling 17 .

Evaporation clouds rain amount of water evaporation « + + + + + + + - + + Philip Asibu-Yartey .Economic Systems Modeling 18 .

` ` 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 + + - Philip Asibu-Yartey .Economic Systems Modeling 19 .

the harvest rate can be µ0¶ until the trees grow enough to harvest delay - Philip Asibu-Yartey . once the trees are planted.` ` Systems often respond sluggishly From the example below.Economic Systems Modeling 20 .

Favorable Location Services and Goods Needed Population Congestion of People & Buildings Philip Asibu-Yartey .Economic Systems Modeling 21 .

Economic Systems Modeling 22 .Number of New Highways New Highways Underconstruction Attractiveness of Driving on Highways Need for New Highways Number of Traffic Jams Philip Asibu-Yartey .

 Use nouns or noun phrases and not verbs. ³ a variable increases (decreases)«.  Be sure that it is clear what it means to say. There is no need to know how they can be quantified. up or down.Economic Systems Modeling 23 . Refer to the variables in the loop as quantities that can rise or fall. The actions are represented in the arrows.´ Philip Asibu-Yartey . grow or decline.

If necessary. invent it. disaggregate it and make it a series of links. Philip Asibu-Yartey . Phrase the variables positively. If a link needs explanation.Economic Systems Modeling 24 .` ` ` ` Do not use causal links to mean ³ and then «´ Identify the units of the variables as much as possible.

Keep diagrams simple to start with. The sign indicates whether the succeeding variables increase (positive) or decrease (negative).` ` ` ` Do not interpret open loops as feedback loops. Philip Asibu-Yartey .Economic Systems Modeling 25 . Watch out for unintended effects. when the previous variable increases.

` ` ` Distinguish carefully between actual values and perceived values. look for corresponding ³desired values´. When using a variable such as ³actual values´. or a detailed operational problem? Philip Asibu-Yartey . Be clear about the purpose of the model.Economic Systems Modeling 26 . tactical. Is it strategic (top level).

` ` ` 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.Economic Systems Modeling 27 . so are the policies clearly shown in the diagram? Philip Asibu-Yartey .

Economic Systems Modeling 28 . so are the exogenous factors which might present the system with setbacks or opportunities clearly identified? Are the variables capable of being easily explained to the target audience? Are these variables. in principle. capable of being measured? Can they vary over time? Philip Asibu-Yartey .` ` ` SD aims to produce policies which are robust against a range of circumstances.

Economic Systems Modeling 29 .` ` ` ` ` ` Does it capture the most significant insights? Was it drawn after careful analysis? Can the diagram be drawn on a level lower or higher without losing conceptual consistency? Is the diagram too complicated that it may fail to communicate? Is the diagram neat and tidy with minimum number of 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? Philip Asibu-Yartey .

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