Bulletin Autumn‧Winter 2004

Citation Prof. Sir James A. Mirrlees, Nobel Laureate in Economics 1996, MA, Ph.D. O ne of the key problems i n mode rn economic research is h ow to deal w i t h problems of asymmetric information 一 that is, where different decision-makers have different information. For example, if the government thinks about raising income tax, it doesn't k now if I w i l l then decide to wo rk less hard than I do now. If the government doesn't k n ow this, h ow can it set taxes so as to optimize revenue w i t h o u t s t i f l i ng my incentive to w o r k hard? Prof. Sir James Mirrlees, whose wo rk we are h o n o u r i ng here today, f o u nd a so l u t i on to this complex problem. The s o l u t i on was so p o w e r f ul t hat i t has p r o v i d ed the basis, not o n l y f or the construction of taxation systems around the w o r l d today, b u t f or our understanding of a whole range of other markets and systems. These include insurance, auctions, wages, and share markets. The contribution of Prof. Mirrlees was of such f u n d a m e n t a l i m p o r t a n c e t o o u r u n d e r s t a n d i ng of these ma r k e ts and systems that i n 1996 he was awarded the Nobel Prize for Economics. As a schoolboy, Prof. Mirrlees wanted to be a professor of mathematics. When he entered the University of Ed i nbu r gh he found the mathematics so easy he was able to develop a range of other interests 一 i n literature, music, art and philosophy. H is study of Utilitarian moral philosophy led h i m to think about fundamental questions such as: What is a good life? What is truly r e w a r d i n g? H i s i n t e n s i ve p o l i t i c al discussions w i th his classmates led h i m to ponder questions of welfare economics. When he went on to Cambridge he found a b s o r b i ng i n t e r est i n issues such as poverty and the distribution of wealth 一 so much so that he chose to take his Ph.D. i n economics. He was moved by the moral questions of his day. As he says himself i n his No b el a u t o b i o g r a p h y : ' …b e c a u se p o v e r t y i n ... t he u n d e r d e v e l o p ed c oun t r i es seemed to me w h a t r ea l ly mattered in the world... that meant [taking up] economics.' Starting a new discipline at Ph.D. level meant a l ot of catching up, w h i c h he p r o c e e d ed to do a m i d s t t he g r e at The 61st Congregation 29