Sir James Mirrlees

Nobel-prize winning economist and academic

Sir James Alexander Mirrlees FRSE, FBA, economist. Born: 5 July 1936 in Minnigaff, Dumfries and Galloway. Died: 29 August 2018 in Cambridge, aged 82.

James A Mirrlees, who taught himself calculus as a teenager, became a college professor when he was 32 and received a Nobel award for solving one of government’s greatest economic challenges — how to get taxpayers to pony up their fair share — died on 29 August at his home in Cambridge, England. He was 82.

His death, from a brain tumor, was confirmed by his wife, Patricia Wilson Mirrlees.

Mirrlees, who taught at both the University of Cambridge and Oxford University, shared the 1996 Nobel Memorial Prize in Economic Sciences with William Vickrey, of Columbia University, for their research into decision-making, which they had conducted independent of each other. Their specific focus was the role played by incentives and the impact on decision-making when the decision-makers have access to different information.

The two economists, who shared a $1.12 million prize, had never met before and would have made an odd couple. Vickrey was an American eccentric; his Columbia University colleagues described him as so idiosyncratic and uninterested in material comforts that he barely knew how much he was paid. Mirrlees was a reserved, conventional British academic who enjoyed detective stories and playing the piano. Neither was expecting to be awarded the prize.

Vickrey, a pioneer in developing what became known as congestion pricing (to reduce traffic, for example), died of a heart attack at 82, three days after the Nobel was announced. He was found slumped behind the wheel of his car in Harrison, New York, while driving to a conference, after three days of nonstop attention over the prize.

Mirrlees was so surprised by the Nobel that he assumed a friend was faking a Swedish accent to perpetrate a hoax. He called Stockholm to verify the award, which cited his economic model for tax policies that would produce the maximum revenue while being applied most fairly.

Mirrlees suggested that too many progressive taxes imposed at the highest income levels could discourage the wealthy from earning even more, reducing the revenue available to pay for government services and assist lower-income households.

He concluded as early as 1970 in the journal The Review of Economic Studies and in subsequent studies with Peter Diamond, an economist and fellow Nobel laureate at the Massachusetts Institute of Technology, that “the income tax is a much less effective tool for reducing inequalities than has often been thought” and that an “approximately linear” – or flattened – tax schedule would be more desirable.

“I must confess that I had expected the rigorous analysis of income-taxation in the utilitarian manner to provide an argument for high tax rates,” Mirrlees wrote. “It has not done so.”

Politically, he was regarded as a social democrat, but his economic model became a rationale, embraced by many conservatives, for flattening tax rates – leading him to reconcile the two positions by saying that his heart was on the left, but that his head was on the right.

Mirrlees also applied mathematical theory to so-called “moral hazard” research, concluding, for example, that people who bought more insurance coverage might take extra risks, resulting in higher claims and lower profits for insurers.

Much of his research, and his Nobel citation, revolved around what he described as “information asymmetry”. By that he meant that in every transaction one party knows more than the other, and that that imbalance affects the transaction. In a real estate purchase, for example, the seller almost always knows more than the buyer.

James Alexander Mirrlees was born on 5 July, 1936, in Minnigaff, a village in southwest Scotland. His father, George, was a bank manager. His mother was Nan (Brown) Mirrlees.

As a child, he recalled, he was not overly ambitious. (“When a friend beat me in chemistry,” he recalled in his Nobel autobiography, “I recollect being scolded at home for accepting defeat with equanimity.”)

As a teenager, he needed glasses, which kept him from playing soccer but gave him ample time for reading. After teaching himself calculus, he decided he wanted to be a math professor and was scheduled to take a test for a scholarship to Cambridge when he was rushed to a hospital with peritonitis, an abdominal inflammation. He never took the test.

Instead, he studied math and natural philosophy at the University of Edinburgh, where he graduated with a master’s degree in 1957. he earned a doctor ate in economics from Trinity College, Cambridge, where his thesis argued that “uncertainty is a reason for saving more, not less”. In 1968, at 32, he was appointed to a professorial fellowship at Nuffield College, Oxford, where he was latera professor of economics. he left in 1995 to join Trinity as a professor of political economy. He retired in 2003.

He married Patricia Wilson in 2001. His first wife, of 32 years, Gillian Hughes, died in 1993. In addition to his wife, he is survived by two daughters, Catriona and Fiona, from his first marriage; a stepson, Rory; and four grandchildren.

Mirrlees was a professor at the Chinese University of Hong Kong and a visiting professor at the Massachusetts Institute of Technology, Yale University and the University of California, Berkeley. He was also president of the Econometric Society and of the Royal Economic Society and was knighted in 1997.

His research on “Optimum Income Taxation,” dating from the late 1960s, was peppered with arcane equations and graphs, but he maintained that much of economics is “in a way quite simple”.

“It is simple to be wrong as well as to be right,” he added, “and it is none too easy to distinguish between the two.” SAM ROBERTS