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.
Professor 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 July 5, 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 doctorate in economics from Trinity College, Cambridge, where his thesis argued that “uncertainty is a reason for saving more, not less.”