Merton Howard Miller Biography - Nobel Prize Winner (1990)


Merton Howard Miller (May 16, 1923 – June 3, 2000) won the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in 1990, along with Harry Markowitz and William Sharpe.

He was born in Boston, Massachusetts. He worked during World War II as an economist in the division of tax research of the Treasury Department, and received a Ph.D. in economics from Johns Hopkins University, 1952. His first academic appointment after receiving his doctorate was Visiting Assistant Lecturer at the London School of Economics.

In 1958, he collaborated with Franco Modigliani to write a paper on “The Cost of Capital, Corporate Finance and the Theory of Investment.” This paper urged a fundamental objection to the traditional view of corporate finance, according to which a corporation can reduce its cost of capital by finding the right debt-to-equity ratio. According to Miller-Modigliani, on the other hand, there is no right ratio, so corporate managers should seek to minimize tax liability and maximize corporate net wealth, letting the debt ratio chips fall where they will.

The way in which they arrived at this conclusion made use of the "no arbitrage" argument, i.e. the premise that any state of affairs that will allow traders of any market instrument to create a riskless money machine will almost immediately disappear. They set the pattern for many arguments based on that premise in subsequent years.

He was also responsible for the "Irrelevance principle" in which he asserted that the costs of raising capital for a corporation by selling more stock (equity), or issuing more bonds (debt), should be equal; thus a corporation's value in the stock market is independent of its capital structure. His analogy was that a pizza cut up different ways does not change the underlying amount of pizza.

Mr. Miller wrote or co-authored eight books. He was a made a fellow of the Econometric Society in 1975 and was president of the American Finance Association in 1976. He was on the faculty of the University of Chicago Graduate School of Business from 1961 until his retirement in 1993.

He served as a public director on the Chicago Board of Trade 1983-85 and the Chicago Mercantile Exchange from 1990 until his death in Chicago on June 3rd, 2000.

Akerlof, George A.
Allais, Maurice
Arrow, Kenneth J.
Aumann, Robert J.
Becker, Gary S.
Buchanan, James M., Jr.
Coase, Ronald H.
Debreu, Gerard
Engle, Robert F.
Fogel, Robert W.
Friedman, Milton
Frisch, Ragnar
Granger, Clive W. J.
Haavelmo, Trygve
Harsanyi, John C.
Heckman, James J.
Hayek, Friedrich August Von
Hicks, Sir John R.
Kahneman, Daniel
Kantorovich, Leonid Vitaliyevich
Klein, Lawrence R.
Koopmans, Tjalling C.
Kuznets, Simon
Kydland, Finn E.
Leontief, Wassily
Lewis, Sir Arthur
Lucas, Robert
Markowitz, Harry M.
McFadden, Daniel L.
Meade, James E.
Merton, Robert C.
Miller, Merton M.
Mirrlees, James A.
Modigliani, Franco
Mundell, Robert A.
Myrdal, Gunnar
Nash, John F.
North, Douglass C.
Ohlin, Bertil
Prescott, Edward C.
Samuelson, Paul A.
Schelling, Thomas C.
Scholes, Myron S.
Schultz, Theodore W.
Selten, Reinhard
Sen, Amartya
Sharpe, William F.
Simon, Herbert A.
Smith, Vernon L.
Solow, Robert M.
Spence, A. Michael
Stigler, George J.
Stiglitz, Joseph E.
Stone, Sir Richard
Tinbergen, Jan
Tobin, James
Vickrey, William

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