In the profession of economics, there is a thing called the Laffer curve.
This curve illustrates the idea that a government’s tax revenue does not increase linearly with tax rates.
At first glance, you’d think that a higher tax rate means more tax revenue. When the government keeps a larger portion of your paycheck, they bring in more money.
But at a higher tax rate, people won’t want to work as much, because their after-tax income will be lower.
The Laffer curve hypothesis argues that beyond a certain tax rate, people will be so disinclined to work that the government will bring in less revenue with a higher tax rate.
And therefore, the Laffer curve hypothesis argues, there is an “optimal” tax rate—a rate that maximizes the government’s tax revenue.
Now, for those of us who aren’t government economists, this idea is still relevant.
In 2007, the author Tim Ferriss published a book that became a massive bestseller. It’s called The 4-Hour Workweek.
In this book, Tim popularized lifestyle design: the idea that you can create a “luxury lifestyle” in the present, rather than following the traditional career model. Instead of working for decades before finally retiring somewhere in your sixties (to do what you really want to do), someone who practices lifestyle design enjoys time and money freedom today.
Tim provoked many by arguing that for us to have time and money freedom today, working four hours per week could be enough.
If that sounds too good to be true: it is.
For most of us, four-hour workweeks are not feasible. Unless you already have a successful business that brings in passive income, with you having delegated or automated most of the work, you won’t earn enough in four work hours per week to have the lifestyle you want.
So four-hour workweeks are extreme. But I think 40-hour workweeks are extreme, too.
I believe that the Laffer curve phenomenon applies to our productivity. There is an optimal number of work hours, at which you’ll get the most stuff done.
Beyond that point, your efficiency drops so much that you’d be better off working fewer hours. Not to mention that you could have been doing fun things with those inefficient work hours.
And I think that for most people, that optimal number of work hours is much less than 40 hours per week. In fact, I’d venture that something in the neighborhood of a 20-hour workweek would work best for many people.
What do you think the optimal number of work hours in a week is?
Got you curious?
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