Systems Thinking
Nathaniel J. C. Libatique
A System Is
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More than the sum of
its parts
Where the rules of the
game are as important
Composed of
Elements and
Interconnections
Invested with a
Purpose
http://www.cellsignal.
com/reference/pathw
ay/Apoptosis_Overvi
ew.html
Ingredients
Collective Behavior
 Signaling and Computation
 Adaptation
Large scale networks with no
central control and simple
rules give  complex
collective behavior,
sophisticated signaling and
information processing and
adaptation via learning or
evolution
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Nature. 2000 Nov 16;408(6810)
Feedback control of intercellular
signalling in development.
Freeman M. MRC Laboratory of Molecular
Biology, Cambridge, UK. MF1@mrclmb.cam.ac.uk
The intercellular communication that
regulates cell fate during animal
development must be precisely
controlled to avoid dangerous errors.
How is this achieved? Recent work has
highlighted the importance of positive
and negative feedback loops in the
dynamic regulation of developmental
signalling. These feedback interactions
can impart precision, robustness and
versatility to intercellular signals.
Feedback failure can cause disease.
http://www.cellsignal.com/reference/
pathway/Angiogenesis.html
http://www.csulb.edu/depts/biology/media/cell751.gif
http://www.ebi.ac.uk/microarray/biology_intro.html
“A system is more than the sum of its parts. It
may exhibit adaptive, dynamic, goal-seeking,
self-preserving, and sometimes evolutionary
behavior.” (D. Meadows)
• MAFIA
• Residents in MTUs
• Sand on the road
• Apoptosis
• Trees
http://en.wikipedia.org/wiki/Corleone_crime_family
Elements vs. Interconnections
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Tree system: physical flows and
chemistry
Sunny day  lose water 
pressure drop  roots take in
more
Roots see dry soil  pressure loss
signals closing of leaf pores
Colder temperatures  nutrients
pass from leaves to trunk and
roots
Overall purpose of the tree is to
grow
Purpose of the tree is nested
within the purpose of the forest
fan.theonering.net/middleearthtours/ents.html
Elements, Interconnections
and the System’s Purpose
People change cells every few weeks, countries change
Presidents every 6 years (or so), Universities have a flow of
students and professors
Rules determine
interconnections: CO2 
O2 process is changed to
O2  CO2 .
Tree survival &
reproduction  grow to
unlimited size
http://simple.wikipedia.org/wi
ki/Baobab
http://en.wikipedia.org/wiki/File:Adansonia_grandidieri03.jpg#filehistor
y
Growth in constrained
environments
 Limits to tree height
 Regenerating capital fueled by a
non renewable resource: Oil
companies
“The least obvious part of the system, its function
or purpose, is often the most crucial
determinant of the system behavior.” (D. Meadows)
• Purpose deduced from behavior, not necessarily
stated goals… acrobatic frog, climate change policies vs.
growth, corrupt government
• Purposes of subunits can add up to an unwanted
overall behavior! … universities, government
inflow
Stocks and Flows
stock
outflow
stock
Fossil fuel, energy efficiency, energy policies
and legislation ….
inflow
outflow
stock
cooling
Coffee
temperature
B
discrepancy
Room
temperature
The greater the temperature difference, the faster the
coffee will cool. Purpose of system is to reduce the
discrepancy to zero.
Balancing feedback: goalseeking, stabilizing,
regulating loop
Body’s
stored
energy
Metabolic
mobilization
of energy Energy
Energy
expenditure
available
for work
Coffee
intake
B
discrepancy
Desired
energy
level
Runaway Loops –
Reinforcing Feedback.
Arms race, accelerated
climate change, inflation,
erosion, epidemics
http://www.guardian.co.uk/world/2010/jan/28/human-rights-watch-hamas
Interest
added
Money in
bank
R account
Interest
rate
pg 31, Meadows
investment capital
Machines/Factories
 Goods/Services
Fraction
of
Output
invested
R
output
+
CO2
Global
Temp
+
-
Photosynthetic
Biomass
R
+
Albedo
A study published in the September 7th issue
(2006) of Nature authored by Katey Walter of
the University of Alaska, and Jeff Chanton of
Florida State University reports that
greenhouse gas is escaping into the
atmosphere at a frightening rate.
Melting permafrost peatlands at Noyabrsk,
Western Siberia.
http://www.terranature.org/methaneSiberia.htm
Biomass
Global
Temp
CO2
Production
R
+
Trapped
GHGs
Why Systems Surprise
 Series
of visible events fool us: a river
floods, a forest cut down, oil
discovered, market crashes.
 Interconnection between systems
structure and behavior is hidden:
interlocking stocks, flows and
feedback loops
Page 92, Thinking in Systems
Spruce budworm
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Budworm attacking spruce and fir for 400 year
cycle now (tree ring records). White pine prime
lumber
Annual DDT since 1950, still budworm
resurgence, 1980 $12.5 M in New Brunswick
Fir – most competitive, spruce next, then birch
Fir threatens monoculture, worm opens forest.
Forest System
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Fir builds up, worm’s favorite food
Budworm population increases nonlinearly
Two to three warm dry springs increase
survivability
Natural enemies cannot control worms
Drastic reduction of food supply crashes the
population!
Oscillation
Drug Supply: Goals
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Addicts - high
Enforcement Agencies - low
Pushers – not to high not too low
Citizens - Safety
Drug Supply System
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Enforcement agents cut imports at border
Drug supply goes down
Other stakeholders redouble efforts to push it
back up:
street prices go up
 addicts commit more crimes for their fix
 more profits at higher prices, suppliers use profits to
increase capital (planes boats)
 Drug supply goes up
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Game Theory and Decisions
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How are societies formed and sustained? The
Social Contract  largely unoptimal equilibrium
Collective of individual decisions optimizing payoff
Taxes:
Most would want to do without it (wealthier without it)
 If no one pays, then no services, everyone worse off
 Equilibrium condition is still unsatisfying
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Prisoners’ Dilemma
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Two crooks questioned by police for a serious
crime. Separate cells, no communication.
If neither confesses then you a 2 year sentence
for each is all you have on the lesser charge.
Turn state witness, confess and you will be set
free!* The other gets 4 years plus 1 more for
obstructing justice. (But if both of you confess
you both get 4 yrs).
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Keep Quiet (Q) or Squeal (S)
Payoffs are in years lost in jail
Payoffs (P1, P2); prisoners 1 and 2
Prisoner 2
Prisoner 1
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Q
Q
-2, -2
S
-5, 0
S
0, 5
-4, -4
J. Webb, “Game Theory”, Springer.
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Both prisoners, by following the optimum
strategy (self interest) are actually worse off!
Honor among thieves?
Revenge! (that’s another game, with a different
set of payoffs!)
J. Webb, “Game Theory”, Springer.
R
Simile File: “capital growth”
Capital
output per unit capital = 33%
investment = 20% of annual output
Years
Capital
output per unit capital = 33%
investment = n% of annual output
n% = 5%, 10%, 20%
Years
R
B
depreciation = capital / capital lifetime
capital lifetime = 10 years, 15 years, 20 years
Capital
Capital Lifetime is a deal breaker!
20 yr. lifetime
15 yr. lifetime
10 yr. lifetime
Simile File: “capital with depreciation”
Years
extraction
resource
y ield
per unit
capital
price
prof it
capital
lif etime
growth goal
inv estment
capital
depreciation
Initial values and constants
• capital = 5 units
• resource = 1000 units
• capital_lifetime = 20 yrs
• price = 3 units
growth_goal = capital*10%
depreciation = capital/capital_lifetime
investment = minimum(profit, growth_goal)
yield_per_unit_capital = 1 – exp(-resource/125)
extraction = capital*yield_per_unit_capital
The bottom line! (extracted output minus
reinvestment)
profit = price*extraction – capital*growth_goal
Yield per unit capital
Capital
Extraction
Boom-Bust Cycle
Time (Yr)
 Sarah
Palin and environmental permits
 California gold rush
 Ghost towns
 Japanese refineries
 British Petroleum, increasingly more
costly and sophisticated mining
technologies
 Price of crude
extraction
Resource Bonanza! (?)
Effect of Larger
Oil Deposits
R = 1000 units
4R
2R
R
extraction
Calibrated Greed
10%
Calibrate your
growth goals…
7%
5%
Time (Yr)
Drill baby
Drill !!!
$ PROFIT $
Capital
Extraction
http://www.youtube.com/watch?v=seXMIHgMFj8
Sarah Palin: Rally 10/25/08, youtube, http://www.youtube.com/watch?v=iolgiIvfV-0
Deepwater Horizon
http://www.economist.com/node/17902859
The oil slick as seen from space by NASA's Terra
satellite on May 24, 2010
http://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill
http://www.nytimes.com/interactive/2012/05/31/world/asia/Territorial-Claims-in-South-China-Sea.html
Resources
D. Meadows, “Thinking in Systems”, Check Google Books
http://books.google.com/books?id=JSgOSP1qklUC&printsec=fro
ntcover&dq=donella+meadows+systems+thinking&cd=1#v=o
nepage&q=&f=false
 www.simulistics.com : the tool used in this presentation
 Steven Levitt: “Why do crack dealers still live with their moms?”
http://www.youtube.com/watch?v=5UGC2nLnaes
 http://www.pioneerentrepreneurs.net/presentations/An%20Int
roduction%20to%20System%20Dynamics.html
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http://www.raczynski.com/pn/simball.htm
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Powersim constructor lite
Netlogo has a systems dynamics tool
SCICOS from Scilab also has a low level simulation tool
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