Public Economics-Wr: Eco 321
Spring 2026 - Unique Numbers: 35275 & 35280
Instructor: Dr. Helen Schneider
BRB 3.116
h.schneider@eco.utexas.edu
Class Times: MWF 1-2 & 2-4 p.m.
Class Location: GAR 0.102
Office Hours: Wednesdays, 9-11 am in person and on
ZOOM
ZOOM meeting id: 845 1714 6226
TA: Katelyn Benoit
Kb45259@my.utexas.edu
TA: Matthew Taylor
matthewtaylor19@utexas.edu
TA: Azdru Granillo
azdrugranillo@gmail.com
TA: Clover Chen
cloverchen@utexas.edu
TA ZOOM Office Hours: T 9:30-11:30 a.m.
ZOOM meeting id: TBA
TA ZOOM Office Hours: M 11-1 p.m.
ZOOM meeting id: TBA
TA ZOOM Office hours: TBA
ZOOM meeting id: TBA
TA ZOOM Office hours: TBA
ZOOM meeting id: TBA
INTRODUCTION
Course Synopsis: In this course you will learn to apply microeconomic analysis to study the role
of the public sector in the economy. Topics that we will cover include public goods and
externalities, education, income redistribution, the workings of social security, welfare, political
economy, cost-benefit analysis, and taxation.
Although this field is sometimes called “public finance,” it is worth noting that this has nothing to
do with stocks, bonds, or any other “finance” topic. It is also worth noting that this is a
microeconomics course. We will not study the short-run macroeconomic effects of taxation and
government spending as you may have done in 304L.
LEARNING OUTCOMES
1. Students will be able to analyze public policies using theoretical tools of public finance.
2. Students will be able to conduct an unbiased literature review of the existing public
policies.
3. Students will be able to evaluate the outcomes of public policies using empirical tools of
public finance and synthesize theoretical models with existing empirical evidence.
4. Students will present their research findings in writing and will incorporate instructor
comments into a formal research paper.
Prerequisites: Intermediate Microeconomics (420K) is an essential prerequisite for this course.
If it’s been a while since you took intermediate microeconomics, the textbook provides a review
in the appendix.
COURSE MATERIALS
Required Text: Jonathan Gruber. Public Finance and Public Policy, 2022, 7th Edition.
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Additional Reading: Additional required and optional readings from sources other than the
textbook will be posted on the course website (see below).
Website: The course Canvas site can be found at utexas.instructure.com. You are responsible for
ensuring that the primary email address you have recorded with the university is the one you will
check for course communications because that is the email address that Canvas uses. This class
will also use the Grades feature on Canvas so that students can keep track of their scores on
assignments and exams.
Lecture recordings: This class is using the Lectures Online recording system. This
system records the audio and video material presented in class for you to review after
class. Links for the recordings will appear in the Lectures Online tab on the Canvas page
for this class. You will find this tab along the left side navigation in Canvas. In this class
lectures will be recorded the entire semester.
POLICY ON STUDENTS WITH DISABILITIES
The University of Texas at Austin provides upon receipt appropriate academic adjustments for
qualified students with disabilities. For more information, contact the Office of the Dean of
Students—Services for Students with Disabilities, 471-6259.
SCHOLASTIC DISHONESTY POLICY
Using someone else’s work in your own writing without giving proper credit is considered
plagiarism, a serious form of academic dishonesty that can result in severe penalties. Copying
someone else’s work, buying a paper and submitting it as your own, copying and pasting text
(even with changes), or borrowing images from an online source, are some examples of
plagiarism. Even if you plagiarize accidentally, you can be held responsible and penalized. While
group work is encouraged, make sure to submit your own work.
Learning to cite sources appropriately is an important part of becoming a professional. When you
are unsure about citation, you are encouraged to ask your instructor. Consultants at the
University Writing Center can also help you determine whether you are citing sources correctly—
and they have helpful guides online for using direct quotations and paraphrasing. Reviewing
those skills will help you feel confident that you are handling sources professionally in your
writing. You can read the University’s definition of plagiarism and other forms of academic
dishonesty in Sec. 11–402 of the Student Conduct Code. For more information, visit the Dean of
Students’ site. All suspected cases of plagiarism will be send to the Dean of Students.
Writing Center: I strongly encourage you to use the Undergraduate Writing Center, PCL 2.330,
471-6222: http://www.uwc.utexas.edu/). The Undergraduate Writing Center offers free,
individualized, expert help with writing for any UT undergraduate, by appointment or on a dropin basis. Any undergraduate enrolled in a course at UT can visit the UWC for assistance with any
writing project. The consultants there work with students from every department on campus, for
both academic and non-academic writing. Their services are not just for writing that has
"problems." Getting feedback from an informed audience is a normal part of a successful writing
project.
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COURSE REQUIREMENTS:
Tests. There will be one midterm and a comprehensive final exam. The midterm will be in class
on March 2. Final exam will be scheduled by the Registrar. If you have an emergency that
prevents you from taking an exam, I need to be notified by e-mail no later than the day of the
exam.
Problem Sets. Four problem sets will count towards your final grade. All assignments may be
obtained at the class web page. Collaboration among students in working out problem sets is
encouraged, but you must write up your own homework. Questions very similar to the problem
sets will appear on the exams. It behooves you to make sure that you understand and can present
the solutions to problems on your own in spite of working on the material with one another.
Turning in identical problem sets will result in a zero for both parties. Copying solutions from
any source constitutes a violation of academic integrity. All problem sets will be submitted
electronically on Canvas.
Grading: Total Problem Sets = 25% (5% each); Midterm = 35%; Final = 40%.
READINGS AND COURSE OUTLINE
Date
Readings
Introduction to the Public Sector and Fundamentals of Welfare Economics
Monday, January 12
Introductions and Syllabus
Gruber, Chapter 1 (optional)
Wednesday, January 14
Tools of Normative Analysis
Rosen and Gayer, Chapters 3
Friday, January 16
Tools of Normative Analysis
Wednesday, January 21
Empirical Tools of Public Finance
Chapter 3
Analysis of Public Expenditure
Friday, January 23
Public Goods
Chapter 7
Monday, January 26
Public Goods
Chapter 7
Wednesday, January 28
Externalities and the Environment
Chapter 5
Problem Set I Posted
Friday, January 30
Pigouvian Taxes
“Pigouvian Taxes” The Economist 2017, Aug 17
Monday, February 2
Externalities and the Environment
Chapter 6
Wednesday, February 4
Political Economy,
Problem Set I Due
Chapter 9
Friday, February 6
Political Economy and Public Goods
Chapter 9
Monday, February 9
Education
Chapter 11
Wednesday, February 11
Education
Epple et al.”School Vouchers: A Survey of the Economic
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Literature”, Journal of Economic Literature 2017, 441-492.
Hanushek, “Assessing the Effects of School Resources on Student
Performance: An Update,” Educational Evaluation and Policy
Analysis 19(2): 141-164.
Problem Set II Posted
Friday, February 13
Catch-up and review
Monday, February 16
Social Security
Chapter 13
Wednesday, February 18
Social Security
Problem Set II Due
Chapter 13
Problem Set III Posted
Friday, February 20
Health Insurance
Chapter 15
Pauly, “The Economics of Moral Hazard: Comment.” The
American Economic Review 1968, 531-537.
Monday, February 23
Government and the Market for Health Care
Chapter 16
Woolhandler and Himmelstein, “Intersecting U.S. Epidemics:
COVID-19 and Lack of Health Insurance,” Annals of Internal
Medicine, 2020, April 7.
Wednesday, February 25
Health Care Reform in the United States
Problem Set III Due
Chandra, et al. “The Importance of the Individual MandateEvidence from Massachusetts.” NEJM January 12, 2011.
Friday, February 27
Review
Monday, March 2
MIDTERM
Wednesday, March 4
Unemployment Insurance, Disability Insurance and Workers’
Compensation
Chapter 14
Raifman et al. “Association Between Receipt of Unemployment
Insurance and Food Insecurity During the COVID-19 Pandemic.”
JAMA Network Open 2021, 4(1), 1-13.
Friday, March 6
Income Distribution
Chapter 17
Monday, March 9
Cash Welfare Programs: TANF & SSI
Chapter 17
Wednesday, March 11
Welfare Reform
Blank, “Evaluating Welfare Reform in the United States,” Journal
of Economic Literature 2002, 1105-1166
Friday, March 13
Catch-up and Review
SPRING BREAK
Monday, March 23
Private and Public Cost-Benefit Analysis
Chapter 8
Wednesday, March 25
Valuing Intangibles
Kenkel, “Using Estimates of the Value of a Statistical Life in
Evaluating Regulatory Effects,”
http://www.ers.usda.gov/publications/mp1570d.pdf
Friday, March 27
Applications of Cost Benefit Analysis
A Framework for Tax Analysis
Monday, March 30
Introduction to Taxation. Personal Income Tax
Chapter 18
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Wednesday, April 1
Friday, April 3
Monday, April 6
Wednesday, April 8
Problem Set IV Due
Friday, April 10
Monday, April 13
Wednesday, April 15
Friday, April 17
Monday, April 20
Wednesday, April 22
Problem Set V Due
Friday, April 24
Monday, April 27
Final Paper Due
May 1, 10:30-12:30 p.m.
35275
May 4, 10:30-12:30 p.m.
35280
Gale et al. Effects of the Tax Cuts and Jobs Act Tax Policy Center,
2018
Taxation and Incidence
Chapter 19
Problem Set IV Posted
General Equilibrium Tax Incidence
Chapter 19
Tax Inefficiencies
Chapter 20
Tax Inefficiencies
Chapter 20
Efficient and Equitable Taxation
Piketty & Saez, “How Progressive is the US Federal Tax
System?” Journal of Economic Perspectives 2007, 21(1), 3-24.
Taxes on Labor Supply
Chapter 21
Taxes on Savings
Chapter 22
Problem Set V Posted
The Corporation Tax
Chapter 24
Taxes on Risk Taking and Wealth
Chapter 23
Tax Reform
Chapter 25
Fiscal Federalism
Chapter 10
Review
FINAL EXAM
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