Stocks, Flows and Variables

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Different models help us do different things. As Scott E. Page explains using his REDCAPE framework, models can help us:

  • Reason—Identify conditions and deduce logical implications.
  • Explain—Provide testable explanations for empirical phenomena.
  • Design—Choose features of institutions, policies, and rules.
  • Communicate—Relate knowledge and understandings.
  • Act—Do something.
  • Predict—Make numerical and categorical predictions of future phenomena.
  • Explore—Investigate possibilities and hypotheticals.

I’ve built and used thousands of spreadsheet models in my career. However, I find visual models are often better for reasoning, explaining, and exploring. So, in this course, we’ll be making use of a visual modeling language consisting of stocks, flows, and variables.

Together, stocks, and flows, and variables clarify how the key resources that drive performance change over time.

  • Stocks are also known as resources, accumulations, and levels. They can be tangible and easy to count or intangible and hard to measure.
  • The only way to change the level of a stock is to take actions that increase the rate of inflow and/or decrease the rate of outflow.
  • Variables contain and relay information about stocks and flows.

Using special software such as Silico, we can augment the visual representation of stocks and flows with numerical values and mathematical formulas. That enables us to simulate performance over time. Simulations help us ask better questions, faster than might otherwise be the case. Better questions help us learn, adapt, and succeed.