DEFINITION of 'James A. Mirrlees'

James A. Mirrlees is an economist who won the Nobel Prize in Economics in 1996, along with William S. Vickrey, for work on information asymmetry as it relates to taxation and moral hazard problems. Mirrlees believes that the tax system should be used to improve equality, and determined that the optimal marginal tax rate should be only about 20%. Furthermore, he determined that this optimal rate could efficiently be applied to everyone, not just the rich, providing justification for a flat tax rate.

BREAKING DOWN 'James A. Mirrlees'

Born in Scotland in 1936, Mirrlees excelled early on in mathematics; "By the age of fourteen I had acquired a strange enthusiasm for mathematics, having managed to acquire a book called Teach Yourself Calculus, and done so," he remembers in his autobiographical write-up for the official website of the Nobel Prize, but he later became fascinated with economics because of the intersection of two factors: his immense curiosity with the field and his sense of human empathy. Mirrlees explained, "It was indeed economics I wanted to do, because I kept discussing it with economist friends, and they didn't make sense to me; and because poverty in what were then called the underdeveloped countries, seemed to me what really mattered in the world, and that meant economics." His journey to the Nobel Prize carried him through the usual suspects of academic institutions known for economic research - MIT, Cambridge, Oxford - and over this span he ran with an intellectual crowd who all mutually benefited from one another. These heavyweights included Amartya Sen, Robert Solow, Kenneth Arrow, Paul Samuelson, Peter Diamond and others.

The Nobel Committee awarded the prize to Mirrlees and Vickrey for their pioneering work "on economic incentives in situations involving incomplete, or asymmetrical information," according to the organization. Many economists have made important contributions on the study of taxation, but it was research into the impact of incomplete information possessed by tax authorities on an individual's motivation and ability to work that drove thinking about how to better optimize income tax policies.

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