Poverty in Panama is a problem that may seem impossible to solve if we consider it as a whole. At the same time, providing partial solutions without understanding the root of the problem won’t solve it either. Systems Thinking emerged as an attempt to solve problems by addressing the mismatch between how real-world systems work and how we think they work by applying four simple rules: distinctions, systems, relationships, and perspectives, known as DSRP. This paper analyzes the problem of poverty in Panama using DSRP. These rules help identify the complexity of the problem as an extensively relational network and serve as a guide to detect leverage points in organizing the thinking process and making it simpler and easier to comprehend.

Poverty in Panama

The problem of poverty transcends boundaries; its global prevalence undermines our humanity and erodes the invisible thread that binds us all together. However, boundaries may be seen as frameworks that facilitate concrete and feasible efforts to tackle poverty. From this perspective, Panama, as a country, has several features ideal for tackling poverty in the short term: it is a relatively small country (less than 4 million people) that has experienced rapid and sustained economic growth over the last decade, with both a robust and active private sector and a considerable middle class. Although the reduction of poverty in Panama has been greater than in most Latin American and Caribbean countries (from 39.9 to 26.2 percent between 2007 and 2012), the poverty rates varies drastically across the country, creating significant disparities. A clear example is how the concentration of the poor is localized in the indigenous Comarcas (where 12% of the national population lives), where extreme poverty rates exceed 40% and poverty rates exceed 70%.

It seems that Panama has the resources, but not the right strategies, to address poverty and ensure more equitable human and social development. From a policy perspective, there is very poor coordination of the initiatives from the government, the private sector, the NGOs, and the civil society, leading to effort duplicity and inefficient allocation of resources. In addition, the short-term projection of Panama’s national strategies endangers the continuity of programs across governmental periods.

Finally, the weakness of its institutions and rule of law suggests that the National Government in Panama should not be the only one in charge of tackling a problem that certainly affects the whole country. The weakness of governmental institutions contrasts with the efficiency, effectiveness, and accountability of the private sector; therefore, a partnership between public and private—a strategy guided by a clear national vision and mission to tackle poverty—may bring better results than those obtained to date.

Why use Systems Thinking to address poverty in Panama?

Poverty and inequality in Panama are problems that have always concerned me, as I consider them absolutely unacceptable from a human perspective. But perhaps what bothered me the most was my inability to suggest a concrete alternative solution. Thinking about poverty and all its possible roots and consequences is certainly overwhelming if we do not have the tools to approach the problem systemically: isolated initiatives or policies, no matter how good they are, won’t ever solve the root problem of poverty. The four simple rules outlined by systems thinking (distinctions, systems, relationships, and perspectives, abbreviated as DSRP), which are universal to all systems thinking methods, are tools that facilitate an integrative understanding of the problem. This set of rules can be mixed and matched, combined and recombined in many complex ways, leading to robust systems thinking that may increase our personal effectiveness in addressing problems (Cabrera & Cabrera 2015).

According to Cabrera & Cabrera (2015), all wicked problems result from the mismatch between how real-world systems work and how we think they work, and Systems Thinking attempts to solve this mismatch. A wicked problem is a social or cultural problem that is impossible to solve due to incomplete or contradictory knowledge, the number of people and opinions involved, the large economic burden, and the interconnected nature of these problems with other problems.

Since poverty is definitely a wicked problem (that we are not solving!), this paper aims to demonstrate that applying systems thinking can provide a novel approach to poverty in Panama.

Think, first!

It seems obvious, but it isn’t. The very first step to thinking systemically is thinking, but not thinking as we usually do, guided by externally imposed frameworks. Thinking systemically involves thinking without judging or constraining our ideas, guided only by an algorithm of four simple rules: DSRP. Throughout any general thinking process we all perceive reality through our mental models. Mental models are the representations or schemes by which each person perceives and understands how the real world works. The better we become at both constructing and deconstructing those mental models, the better we can approximate reality and understand any problem.

Figure 1 shows the first result of my thinking process about poverty in Panama: a complex and massively interrelated network of concepts, including several definitions of poverty, data that supports those definitions, different perspectives, causes and effects of poverty at a national level, the immediate needs of the poor, policies in place, public and private initiatives, among others. Although this first attempt interrelates concepts and ideas that are usually considered independently, the result is still too difficult to understand in order to provide solutions. Therefore, my next challenge would be to identify leverage points to make my thinking simpler and easier to comprehend.

Figure 1: Thinking process that shows the complexity of poverty in Panama.

Organizing my thinking systemically

This section will explain in detail how each of the four simple rules was used to analyze, organize, and understand the problem of poverty in Panama, by simplifying the complex universe of ideas and concepts that arose when thinking about poverty in the previous section.

Perspectives Rule

The first rule applied to organize systemically the problem of poverty in Panama is the perspectives rule, which suggests that any thing or idea can be shaped or can be derived by the point or the view of a perspective (Cabrera 2015). Perspectives are made up of two related elements: “a point from which we are viewing and the thing or things that are in view” (Cabrera 2015, p.50). In order to organize the universe of ideas and concepts involved, a thinker must choose the perspective(s) from which to view the problem. In this case, the thing in view (i.e., poverty in Panama) is going to be analyzed from three different points: public policy, capabilities approach, and Systems Thinking, as indicated in Figure 2.

Figure 2: The perspectives rule leads systems thinkers to explicate multiple perspectives that frame the topic or issue.

The public policy perspective considers the regulations, institutional customs and programs to address poverty. From this perspective, poverty is a problem of public interest that governments must understand based on accurate data in order to adopt a coordinated strategy to solve it. The capabilities approach perspective, first articulated by Indian economist and Nobel Prize winner Amartya Sen, emphasizes poverty as a multidimensional phenomenon over the idea of poverty as exclusively the of lack of money; this perspective considers health, education, standard of living, and the capability to realize one´s full potential as human being as important dimensions of poverty. The Systems Thinking perspective understands poverty as a wicked problem that may arise from a mismatch between how poverty as a system works in the real world and how we think it works based on our mental models.

Distinctions Rule

The second rule to be applied is the distinctions rule, which suggests that any idea or thing can be distinguished from other ideas or things (Cabrera & Cabrera 2015). In using the distinctions rule to better understand the problem of poverty in Panama, the first two questions to ask would be: what is poverty in Panama? What is not poverty in Panama? The answers given to both questions are going to be determined by the three perspectives presented above (i.e. Systems Thinking, capabilities approach and public policy). Figure 3 represents the question “what is poverty in Panama?” as a first step to distinguish it’s meaning from what is not poverty in Panama. The yellow lines connect the different perspectives from which poverty in Panama is viewed and distinguished.

Figure 3: Making distinctions between ideas leads the systems thinker to draw boundaries that define what is the thing, and at the same time what is not the thing.

Keeping in mind that from the systems thinking perspective, poverty is a wicked problem derived from a mismatch between how poverty works in the real world and how we think it works, the application of the distinctions rule would help to (re)define the concept of poverty, and consequently to start building a new mental model of it that better approximates reality. (Re)defining poverty based on concrete, accurate, and updated data, would allow policy- and decision-makers to better target and understand the magnitude of the problem. Only after having (re)defined poverty and knowing who the poor are will it be possible to identify their needs and structure concrete solutions. The implementation of this structure of solutions will consequently have an impact on the concept of poverty and the data that supports it, providing a feedback that will continuously reframe it. As a conclusion, the relationship between the concept of poverty and the structure of solutions to it will become a virtuous, dynamic, and adaptive cycle. Figure 4 represents a feedback loop that illustrates the continuous cycle between the concept of poverty and the structure of solutions, and how each feeds and influences the other. This figure also represents a new mental model to understand poverty.

Figure 4: Feedback loop of a new mental model of poverty: distinctions and relationships rule.

Relationships Rule

After making distinctions around the concept of poverty and the structure of solutions, the application of the relationships rule helps identify the way the different concepts relate among themselves. For example, the data used to define poverty will be updated by the effect the structure of solutions will have on it, and, as a consequence, the concept of poverty and the solutions to it will be continuously redefined. The redefinition of poverty could be used to identify the needs of the poor, and the identification of those needs could be used to structure policy solutions. The relationship between the reframed approach to poverty and the structure of solutions is a double and cyclical ecology of approximation and feedback that dynamically defines and evolves the definition of poverty over time as it (poverty) continuously changes (Figure 4).

Systems Rule

Finally, applying the systems rule means splitting ideas into parts and lumping them into wholes. Let´s consider the redefined concept of poverty: it represents a whole system integrated by different parts (e.g. updated data, indicators, methods for targeting the poor), and is simultaneously a part of a bigger system (i.e. Poverty in Panama). Now, let’s consider the “structure of solutions” as a whole system. Different parts could integrate it, such as the actors that would implement it (e.g. a Public-Private Partnership), the type of interventions (e.g. the expansion of human capabilities, based on the capabilities approach), and the effects that these solutions may have on poverty in Panama. Figure 5 shows how the “structure of solutions” is itself a system integrated by different parts (i.e. Public-Private Partnerships, interventions to expand human capabilities, and the effects of this interventions on poverty), and simultaneously, a part of a bigger system (i.e. poverty in Panama).

Figure 5: Part-whole system

At the same time, any of the parts that integrate the system of the “structure of solutions” can be analyzed as a system itself, divided into smaller parts. For instance, figure 6 shows how the Public-Private Partnership is a system integrated by the private sector and the public sector, related between them by a partnership agreement. The same figure shows how different parts integrate the system of interventions to expand human capabilities (e.g. interventions focused on expanding human capital, interventions focused on expanding social capital), and how these parts are also systems integrated by parts.

Figure 7: Parts that are also wholes that contain parts


Thinking systemically by iteratively using DSRP rules makes it possible to think about poverty in a more organized manner, making the problem easier to comprehend and explain. Figure 8 illustrates how DSRP simplified the initial conceptualization of poverty in Panama into a simpler, clearer and more functional structure. By changing the way in which we approach poverty in Panama, the problem itself is changed from a complicated scheme that seemed impossible to grasp, to a more structured and dynamic system easier to understand. This shift allows an approach to the whole system, rather than relying on focusing on separate parts of the problem independently.

Figure 8: The use of the four simple rules guided and reorganized the thinking process, making it easier to comprehend.

The use of the four simple rules also facilitated the emergence of a new mental model of poverty, that instead of defining it as a static concept defined by a theoretical definition, considers poverty as a dynamic concept, part of a cyclical ecology feedback loop, in which both the problem and the solutions continuously feed and adapt to each other (Figure 4). The Systems Thinking perspective made possible to understand poverty in Panama as a complex adaptive system instead of a rigid one. Defining the perspective(s) through which we want to address a problem can constrain and guide our thinking [about that problem]. After identifying these perspectives, paying attention to the way the different concepts interrelate was very useful to identify dynamical interactions that challenged the way poverty is commonly understood. Finally, being aware of the fact that any idea can be separated into parts or lumped into a whole helped me to effectively organize my thinking in a way that not only facilitates my personal understanding of the problem but also affects the way I communicate my ideas to others (see Figure 8). Identifying the different systems (e.g., structure of solutions), and the way they are interrelated as part of a bigger system (i.e., poverty in Panama) was critical to think effectively about solutions that address the root problem, instead of only focusing on independent parts of it.

Embracing simplicity is an essential part of thinking systemically. You don’t need to spend a lifetime to become a systems thinker; you only need to start following the four simple rules (Cabrera & Cabrera 2015). The beauty behind these rules is that they are universal to all systems thinking methods, and that they can be applied to solve any wicked problem, from everyday challenges, like how to communicate our thoughts, to global problems, such as poverty. To think, and to do it systemically, is more than an alternative tool; it is a responsibility related to our effectiveness as human beings, and a powerful method to find novel solutions that improve the world we live in. By continuously examining and updating our mental models and moving them closer to how the real world works, the problems that affect us become less intractable and more solvable.


Banerjee, Abhijit V, and Esther Duflo. Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. New York: Public Affairs, 2011.

Cabrera, Derek Cabrera and Laura Colosi. 2015. Systems Thinking Made Simple. New Hope for Solving Wicked Problems. United States of America: Odyssean Press.

Kolko, John. Wicked Problems Worth Solving. Standford Social Innovation Review. Stanford, 2012.

World Bank. 2015. Panama: Locking in Success. A Systematic Country Diagnostic. Washington, DC: World Bank Group.


About the Author: Michelle Muschett is a Master in Public Administration Candidate (2016) with a concentration in International Development at Cornell University.  A native of Panama, she possesses a Bachelor of Laws and Political Science from Santa Maria La Antigua University, Panama; a Master in Commercial Law from University Externado of Colombia, and a Master in Management of Cultural Projects from Palazzo Spinelli, Italy.  Michelle has professional experience in the areas of Law, culture, social policy, and civil society participation.

1 Comment

Kai Neumann

The systemic way is definitely the right way though to as presented here it seems to be a bit abstract and academic. I remember a project addressing the transformation of Colon City (Panama) in a systemic way (by Roger Kaufman) that was a rather descriptive approach and Jürgen Sturany, a business partner of Consideo, showed how to model it qualitatively and in a rather explorative way. That approach was quite easy and extremely insightful. It can be used for participatory stakeholder modeling. I will try to contact Jürgen so he can publish the model on know-why.net


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