In economics, The Laffer Curve is a visual representation of economist Art Laffer’s theory about the relationship between government tax rates and tax revenues. He thought that there is point at which increasing tax rates begin to negatively affect revenues due to removing the capital from the markets that would have otherwise been generating more taxable profits and incomes, as well as reducing the financial incentives for production. Tax rates that are low and rates that are very high both result in a sub-maximal return for the government. There is a rate somewhere in between that balances these effects, and produces a maximum tax revenue. His idea was famously illustrated this way.
Tangent: I find it curious that market liberals tend to use this idea to bolster their arguments while Keynesians have demonized Laffer. The goal of the Laffer Curve is to maximize government revenue at whatever cost to private markets. Seems to me to be a more of a tool for those seeking to raise taxes than to lower them, but I digress.
As I’ve written before, the same relationship exists between exercise fitness and human health, so I have modified the graph for our purposes. Let’s call it the Fitness Laffer Curve.
We know about the benefits of exercise fitness for human health and we also know that extreme endurance exercise can result in permanent heart damage and other negative outcomes. Somewhere in between is an optimal level of activity that results in the highest increase in health.