Thinking in Systems, Key Ideas (Ch. 1)

okay i would like to do a series on thinking in systems and this book is by donna meadows and it's really really useful so i'm actually going to at least start by going chapter by chapter just sort of explaining the details in the chapter and of course i'm an economist so i'm going to comment on her way of thinking from an economist's point of view but these are just great tools and great vocabulary and great ways of running thought experiments and structuring your thought for any field really now of course the first question is what

is a system and she defines the system as having three three things elements connectors and purposes but we might want to have some different examples in our head as we think this through so as an economist i'm thinking about the health care system and the legal system but systems can include physical things like the digestive system systems include the school system the economic system obviously the economic versions are the ones that bubble up to the top of my mind but there's lots of different types of systems and systems have parts where which are the elements

the different pieces that if you sort of took a snapshot of the system and tried to diagram the snapshot what are the things that are in that system at that moment and then systems have connectors which sort of connect between the parts and create relationships between the parts that can be dynamic and then of course systems have a purpose now this one is actually interesting in her book because she says sometimes the stated purpose is not the real purpose of the system the the purpose of the system is what it does or what it accomplishes

so let me just fill out this table with some examples of each so here are some examples we've got elements of the school system includes teachers the salary structure might sort of create a relationship between say teachers and administrators and their contracts so this is actually one point i wanted to make as an economist which is when i first saw her structure and the way she was breaking this down my first question was where are the incentives in this in this framework and the incentives are really the connectors they're sort of what creates relationships between

the parts the incentives are basically what creates dynamic movement within the system and the purpose of an education system or of a school system might be education for the legal system we might have laws are one element of that system of course there's many many elements of the system that complex legal review for example the process that lawyers go through when they try to enact the laws where they might compare and pull from different laws and review precedent all of that might be a connector within the system that could create a dynamic effect and then

purposes might be one purpose of the legal system might be to contain crime um the digestive system we might have the stomach is one element the large intestine small intestine um body signals might be a connector between the different systems is your stomach upset and of course body signals can be driven by chemicals and by the nervous system and chemicals actually could be an element as well as a connector in some ways and then the purpose of that system might be nourishing your body in some way keeping you alive and then of course the health

care system which i study um one element of a health care system is insurance companies and of course contracts between insurance companies and doctors and contracts between patients and insurance companies those contracts connect the different parts the doctors the patients the the drug companies all of that are connected through contracts and what is the purpose of the health care system well when i teach this of course i i sort of teach the triple aim which is what should be the purpose of a health care system and this is where i get it some deviation between

the stated purpose and the actual purpose that it's accomplishing which is that in healthcare econ class the the triple aim is basically says healthcare systems should aim to have high population health uh uh contain cost per capita so that the system is sustainable i would actually prefer if this one were sustainability as opposed to cost per capita but this is the official triple aim and then patient satisfaction or something like patient experience so the healthcare system says these are the goals or at least healthcare administrators learn that these are the goals but you might look

at any given one of them and say actually the health care system is perhaps not accomplishing one or two of these goals maybe even maybe even three and instead it's accomplishing something else such as making itself larger that's actually one of the problems in a lot of systems is that they have a stated purpose which is uh pro-social in some way and their purpose instead becomes to become bigger and bigger as a system which serves the people at the top who sort of want to increase their power so that's one uh that's when uh just

point that that connects with something in her first chapter now i'd like to read a couple of quotes from this chapter because i thought these were just really insightful so one thing she says is a system is more than the sum of its parts it's this dynamic interaction between the parts to accomplish something she says systems can be self-organizing and are often self-repairing over at least some range of disruptions and of course the immune system in our bodies is very self-repairing we know that when we get cut it may take a couple of weeks but

that's going to heal through the systems in the body that sort of sun signals that you need white blood cells or what not to go to that that site and the same is true of some economic systems that there are some natural forces that lead to stability that lead to self-maintenance of the system another great quote from that first chapter is many of the interconnections operate through the flow of information so oftentimes the connectors are information based and one of the reasons this is important for economists is that we're in an information-based economy information is

where so much of the resources of society are being channeled and that includes information about how to improve your business it includes information about health care information about how to live your lives there's so much information out there that's sort of the focus of the economy at the moment and so um it's kind of acknowledging that the connectors are often the most powerful parts of a system and this is another point she makes is that oftentimes when we think of a system our minds will gravitate toward the elements because the elements are easy to visualize

they're sort of like if we're visualizing a system we're thinking about a snapshot of it but she says actually what matters more in terms of what the purpose ends up being is oftentimes the connectors between the different parts more so than the parts itself and she makes the point that if you change out all of the parts like if you replace every member of a basketball team with a different person that actually doesn't change the system as much as changing say the rules of the game changing the rules of the basketball game would completely change

the system changing the players changes it a little bit but not as much okay she uses these diagrams to help us sort of think about the dynamics of a system and the simplest is going to be the bathtub example that she brings up where stock is the snapshot and time of what the system looks like with no dynamics and then these arrows represent the dynamics that are changing and that are working within the system to sort of do whatever and so if the stock of a bathtub is how full the bathtub is with water then

the inflow might be the faucet and the outflow might be the drain and the the stock at any given moment in time is going to be a function of the previous inflow and previous outflow and she makes the point that a lot of times you can't change the stock of a system immediately you can't just like snap your fingers and get rid of all the water in the bathtub you need to sort of let this fl outflow process happen if you wanted to get rid of that and a lot of times when people think about

systems they may be thinking about okay we need to change the system now but there may be elements that take time to actually work through uh work through different types of change and of course stock and flow are used in the field of economics as well another cool thing she talks about in the chapter is the feedback loop where um she'll represent the feedback loop with these arrows where there's sort of the circular motion this leads to this lead to this leads to this and she talks about these two types of feedback loops where balancing

feedback loops sort of bring the system back into equilibrium and reinforcing feedback loops set the system sort of out of equilibrium in a spiraling kind of mode now i love her example of a balancing feedback loop which was uh basically your budget and the amount of money you have in your bank account where the stock here of course is money in your bank account the inflow is your income every month the outflow is your spending every month and if you have a situation where the stock of money in your bank account is less than you

would like it to be that's a discrepancy between your goals and uh what's actually happening in your bank account then that's going to lead you to change your outflow to spend less money and that is in turn going to influence the stock so the budgeting every month or checking your your bank account every month is a little mini balancing feedback loop that people have and my favorite example of the reinforcing feedback loop was her and her brother getting into fights when they were kids where um that the stock might be amount of goodwill between the

brother and sister and if the brother started poking at the sister and trying to annoy her she would react by trying to poke at him even more by trying to beat him at the poking back and then he would react to that by poking back even more and it led to this uh escalating feedback loop spiral where they just got into more and more of a fight until something dissipated that so that that's a fun example of a reinforcing feedback loop from her from her chapter i think that's all i will say on this for

now basically systems thinking is super useful for complex systems i think economists should all read this book because it adds this extra layer to our thinking which i think is very helpful