Blog 79: Maslow’s Hierarchy of Needs by Xavier Lo, FIA, FRM, MBA

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With all the things that are happening in the world right now, maybe it’s the right time to introduce a basic framework which describes human behaviour: Maslow’s Hierarchy of Needs [需求層次理論].

As in the name, this framework was created by Abraham Maslow. It basically gives us a model to look at what drives human behaviour [人類行為]. There are basically 5 levels of needs [需要], and in order, they are: physiological [生理], safety [安全], love and belonging [歸屬感], esteem [尊重], and then finally self-actualisation [自我實現]. Physiological is to do with surviving, like having food and water. Safety is to do with personal security and health, and even financial safety. Love is the need to develop human interaction and relationships, both physically and mentally. Esteem is respecting yourself, and requiring respect from others. Essentially boosting your ego. Self-actualisation is more of trying to be the best version of yourself in the skills that you’re interested in, such as trying to be the best at an instrument, or travelling.

This framework is easy to use. Imagine a pyramid [金字塔]. Without fulfilling the lower levels, you’d never be able to build a taller pyramid. That means without physiological fulfilment [生理需要], you won’t be able to get to safety or even love. This sort of makes sense intuitively. If someone didn’t even have a safe place to sleep overnight, would they care about their self-esteem or trying to learn an instrument [學樂器]? What this tells us is that if you are in a position where you are trying to be the best actuary that you can be, you probably have already fulfilled the previous 4 levels of needs to some degree – so you should try to appreciate that there are some people who are less fortunate than you.

Is this framework accurate? I would say every model or concept has its flaws. But at least it gives us a basic introduction to analysing human behaviour!

About the Author

Xavier Lo, FIA, FRM, MBA

Qualified fellow actuary (in UK and Hong Kong), Financial Risk Manager, and MBA graduate (listed on the Dean's List) with a passion for insurance, data science, and analytics. Experienced in a broad range of insurance roles (pricing, capital modelling, reserving, ERM), along with a touch of knowledge in banking. Member of the General Insurance Committee (2021), Actuarial Innovation Committee (2019 - 2021) in ASHK.

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