Maslowian portfolio theory

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Maslowian portfolio theory (MaPT) creates a normative portfolio theory based on human needs as described by Abraham Maslow.[1] It is in general agreement with behavioral portfolio theory, and is explained in Maslowian Portfolio Theory: An alternative formulation of the Behavioural Portfolio Theory,[2] and was first observed in Behavioural Finance and Decision Making in Financial Markets.[3]

Maslowian portfolio theory is quite simple in its approach. It states that financial investments should follow human needs in the first place. All the rest is logic deduction. For each need level in Maslow's hierarchy of needs, some investment goals can be identified, and those are the constituents of the overall portfolio.

Comparison with behavioral portfolio theory[edit]

Behavioral portfolio theory (BPT) as introduced by Statman and Sheffrin in 2001,[4] is characterized by a portfolio that is fragmented. Unlike the rational theories, such as Modern Portfolio Theory (Markowitz[5]), where investors put all their assets in one portfolio, here investors have different portfolios for different goals. BPT starts from framing and hence concludes that portfolios are fragmented, and built up as layers. This indeed seems to be how humans construct portfolios. MaPT starts from the human needs as described by Maslow and uses these needs levels to create a portfolio theory.

The predicted portfolios in both BPT and MaPT are very similar:

  • In BPT: safety layer, corresponds to the physiological and safety needs in MaPT
  • Specific layer in BPT are the love needs and the esteem needs in MaPT
  • Shot at richness in BPT is the self-actualization level in MaPT

One will notice that the main differences between MaPT and BPT are that:

  • MaPT is derived from human needs, so it is to some extent a normative theory. BPT is strictly a descriptive theory.
  • MaPT generates from the start more levels and more specific language to interact with the investor; however, theoretically BPT allows for the same portfolios.

Portoflio optimization[edit]

Generally it seems that Roy's safety-first criterion is a good basis for portfolio selection, of course, including all generalizations developed later.


  1. ^ MASLOW, A. H. (1943): “A Theory of Human Motivation,” Psychological Review, 50, 370–396.
  2. ^ DE BROUWER, Ph. (2009): “Maslowian Portfolio Theory: An alternative formulation of the Behavioural Portfolio Theory”, Journal of Asset Management, 9 (6), pp. 359–365.
  3. ^ DE BROUWER, P. (2006): “Behavioural Finance and Decision Making in Financial Markets,” in Financial Markets, Principles of Modeling Forecasting and Decision-Making, ed. by W. Milo, and P. Wdowinski, pp. 24–44, Ł´od´z, Poland. Ł´od´z University Press.
  4. ^ SHEFRIN, H., AND M. STATMAN (2000): “Behavioral Portfolio Theory,” Journal of Financial and Quantitative Analysis, 35(2), 127–151.
  5. ^ MARKOWITZ, H. A. (1952): “Portfolio Selection,” Journal of Finance, 6, 77–91.