Systems Thinker - Vol. 10 No. 4 - Step-by-Step Stocks and Flows - The Improving Rigor of Your Thinking - Part 1 of 2

Oct 26, 2026

A two-part article explains how to convert causal loop diagrams (CLDs) into stock and flow diagrams with a step-by-step approach that improves rigor and completeness. The first installment introduces the foundations of stocks and flows in system dynamics modeling, clarifying that stocks accumulate while only flows change them. It also contrasts CLDs with stock-and-flow diagrams, using examples from inventory, financial statements, and a reinforcing Births–Population loop, emphasizing unit consistency and practical learning outcomes.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages2

Reading Time5 min

AccessFree to download

Overview of Stocks and Flows

Stocks and Flows Fundamentals

Stocks Versus Flows

Differences Between CLDs and Stock and Flow Diagrams

Contrasting Purpose and Detail

Example: Births and Population

| T | O | O | L | B | O | X | | SYSTEMS THINKER® | | --- | --- | --- | --- | --- | --- | --- | --- | --- | B U I L D I N G S H A R E D U N D E R S T A N D I N G V O L . 1 0 N O . 4 M AY 1 9 9 9 STEP-BY-STEP STOCKS AND FLOWS: T H E IMPROVING THE RIGOR OF YOUR THINKING B Y D A N I E L A R O N S O N A N D D A N I E L A N G E L A K I S P A R T 1 O F 2 This article is the first in a two-part series on converting causal loop diagrams tostock and flow diagrams. This first article provides a basic introduction to stocksand flows. The second article, which will appear in the August issue, will give a step-by-step process for converting from causal loops to stocks and flows. T he systems thinking community has always considered stock and flow diagrams to be important tools, and recognition of their key place in the systems thinker’s toolkit has continued to grow. However, despite their importance, difficulty in moving from causal loop diagrams (CLDs)—which most people learn first—to stock and flow diagrams has contributed to limiting their use. Although the difficulties that some people have when trying to make the transition from causal loop diagrams tostock and flow diagrams are real, they are also largely avoidable. Following a specific series of steps, students can learn how to create stocks and flows from causal loops quickly and efficiently.When we used a step-by-step approach as part ofa two-day course with learners who had little or no prior background in systems thinking, 90 percent were able to turn a causal loop diagram into a stock and flow diagram correctly in only 20 minutes. In addition, they found that the rigor and completeness of their understanding had increased significantly over what it had been when they had used only causal loops. Overview of Stocks and Flows Stocks and flows are the foundation of system dynamics modeling. But how exactly do they work? Stocks are entities that can accumulate or be depleted, such as a bathtub, which fills with water from a faucet. Inventory and Installed Base are examples of stocks. Flows, on the other hand, are entities that make stocks increase or decrease, like a faucet or drain affects the level of water in a bathtub. Production (which increases Inventory) and Purchases by Consumers (which increases Installed Base) are examples of flows. Note that flows are the only variables that can change stocks. The presence of a flow indicates the movement of material; for example, the flow of inventory, cash, and soon. A useful rule of thumb is that, because flows capture activity, all of the things that you find on income and cash-flow statements (such as cost of goods sold, interest expense) are flows; these items represent financial activity during a specific period. In contrast, all of the line items that you find on a balance sheet (such as assets and liabilities) are stocks; these items represent financial status at any point in time. A technique commonly used to distinguish a stock from a flow is to consider what would hap- Birth Rate Births est payment per day, and the movement of people in and out ofa conference room would halt, because they are dependent on time.These are flows (see “Stocks Versus Flows” on p. 7) . Finally, at all times, it is important to maintain unit consistency between a stock and the flows that affect it. Consider, for example, a stock that represents the balance in your company’s bank account in units of dollars. This stock cannot have PC Manufacturing Rate as an inflow, because its units are PCs per week! Instead, an acceptable inflow would be Payments from Customers, which would be in units of dollars per month. Differences Between CLDsand Stock and Flow Diagrams Causal loop and stock and flow diagrams are both valuable tools, but they are fundamentally different. CLDs are useful for communicating high-level views of a system, especially to people who have little background in systems thinking or system dyna

FAQs

What is the core difference between causal loop diagrams and stock-and-flow diagrams?

CLDs communicate high-level system views and are often easier for beginners to understand, while stock-and-flow diagrams provide greater rigor by distinguishing stocks (accumulations) from flows (actions that change them).

How do stocks and flows work in system dynamics modeling?

Stocks represent entities that can accumulate or deplete (e.g., a bathtub level), while flows represent what increases or decreases those stocks (e.g., faucet and drain). Only flows can change stocks.

Why is unit consistency important when defining a stock and its flows?

Because flows must match the stock’s units, an inflow stated in incompatible units (e.g., PCs per week into a dollar-denominated bank balance) would be incorrect. Acceptable inflows must use consistent measurement units over appropriate time periods.

Oct 26, 2026

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