ECO 379 · Spring 2026

Archived syllabus. Policies, dates, assignments, and readings reflect Spring 2026.

Course information

ECO 379-001: The Economics of Public Policy, Law, and Government University of Kentucky — Spring 2026 Credits: 3.0 Meeting Time: Monday/Wednesday, 9:30–10:45 a.m. (Eastern Time) Meeting Location: Business and Economics Building, Room 183

Instructor Information

Instructor

Professor Aaron Yelowitz Office: 225H Business and Economics Building Email: aaron@uky.edu (Use Canvas Inbox for course-related communication; typical response time: 24 hours.) Office Hours: Monday/Wednesday, 1:30–2:30 p.m. (Eastern Time), and by appointment (in person or via Zoom; email to schedule)

Course Description

(Official Catalog Description) This course develops the economics view of the role of government from both normative and positive perspectives. Conditions under which markets perform well are presented, as well as cases where there is market failure. Legal and social institutions that support markets are discussed, as are government policies to intervene in markets. Economic models of the operation of government are developed to understand possible shortcomings of government action, as well further linkages of economics to law. The economics perspective on income redistribution is presented along with examples from specific government programs.

Course Prerequisite

Prerequisite: ECO 201.

Required Materials and Technology

Textbook

Jonathan Gruber, Public Finance and Public Policy, 7th edition (Macmillan Learning, 2022). Earlier editions are acceptable. Technology: Students must have regular access to Canvas and a computer capable of running Respondus LockDown Browser with Monitor ("Respondus"). Lecture Recordings (Echo360): Lectures will be recorded using Echo360. Recordings are a supplement, not a substitute for attendance. Students are warned that audio and video quality—particularly for whiteboard work—may be inconsistent.

Associated Course Fees

This course has an additional fee of $37.02 per credit hour.

Student Learning Outcomes

After completing this course, the student will be able to:

• Understand normative and positive perspectives on the role of government.
• Identify market failures and policy rationales for government intervention.
• Apply economic theory and empirical evidence to public policy questions.
• Analyze how legal and institutional structures shape economic outcomes.
• Evaluate redistribution policies and government programs.

Activities, Assignments, Exams, and Grading Scheme

A grading curve will be applied. Historically, approximately 30% of students earn an A, 50% earn a B, and 20% earn a C or lower.

Note on Weighting (Canvas): Regardless of points assigned within Canvas, each tutorial counts equally toward the 20% tutorial component and each quiz counts equally toward the 60% quiz component. Canvas aggregate totals do not reflect the actual weighting scheme.

Extra Credit: Extra credit may be offered sporadically based on in-person participation (attendance). It is truly "extra" and will not affect the grading scale. If offered, it will be added only at the end of the semester after the grading scale is determined.

Mechanics of Submissions

All submissions occur via Canvas.

• Tutorials: Open-book/open-note; untimed; unlimited attempts during the open window.
• Quizzes and Final Exam: Timed, closed-book/closed-note, and administered via Canvas using Respondus.
• Excused absences: With documentation, alternative arrangements will be made if a deadline is missed.
• Unexcused absences: Late work is not accepted.
• Practice quizzes will be provided to ensure technology functionality; these do not count toward your grade.
• If Respondus-proctored exams are infeasible for your situation, contact the instructor early to discuss alternatives.

Summary Description of Course Assignments

Tutorials (20%)

• Open-book/open-note; untimed; unlimited attempts during the open window.
• Tutorials are assigned on Fridays and due the following Friday; any exceptions will be announced in advance on Canvas.

Quizzes (60%)

• Approximately 13 quizzes during the semester; top 10 scores count.
• Closed-book/closed-note; timed; administered on Canvas using Respondus.
• Each quiz is available for a full 24-hour window on the assigned day (typically Fridays, 12:00 a.m.–11:59 p.m. ET).
• Quiz dates are announced in advance on Canvas.
• Academic integrity rule: do not discuss quiz questions with others until reviewed in class.

Final Exam (20%)

• Closed-book/closed-note; timed; administered on Canvas using Respondus.
• Final exam window: Wednesday, May 6, 2026 (ET).
• Window opens 12:00 a.m. ET and closes 11:59 p.m. ET.
• There is no in-person final exam.

Technology Checks (Required)

• Ungraded practice quizzes (simple questions to test setup) will be required before the first quiz and before the final exam. These do not count toward grades.

Policy on Grade Return

• Tutorials: Immediate feedback upon submission.
• Quizzes and Final Exam: Grades are posted within one week after the assessment window closes; any exceptions will be announced on Canvas.

Artificial Intelligence (AI) Use Policy — Level 3: Open Use

Students are encouraged to use generative AI tools (e.g., ChatGPT, Gemini, Claude, Microsoft Copilot) to support learning and understanding of course material. Students remain responsible for the accuracy and originality of all submitted work. Use of AI tools is not permitted during Respondus-proctored quizzes or the final exam.

Attendance, Late Work, and Excused Absences

• Attendance: Strongly encouraged but not graded directly. Limited extra credit may be offered for in-person participation.
• Late Work: No unexcused late work is accepted.
• Excused Absences: Require documentation (medical documentation, official university notice, university-sanctioned event documentation, or similar verifiable evidence).
• Religious Holidays: Students observing major religious holidays must provide written notice during the first week of class.

Important Dates and Holidays

(Spring 2026)

• First day of class: Monday, January 12, 2026
• Martin Luther King Jr. Day (no class): Monday, January 19, 2026
• Spring Break (no class meetings): March 16–21, 2026
• Prep Days: April 27–29, 2026 (no new tutorials or quizzes will be assigned)
• Final exam (24-hour window): Wednesday, May 6, 2026

Weather-Related Closures, Delays, and Technology Disruptions

Weather-related cancellations or delays apply to in-person class meetings and do not alter Canvas deadlines for tutorials, quizzes, or the final exam unless explicitly announced.

If individual internet outages or system-wide technology disruptions occur (e.g., Canvas outages), reasonable accommodations will be made to ensure students are not academically disadvantaged. Any adjustments will be communicated via Canvas.

Final Exam Details

The registrar-assigned exam slot for the MW 9:30 a.m. meeting pattern is Wednesday, May 6, 2026, 8:00–10:00 a.m. (ET). There is no in-person exam at that time. The final exam is administered online via Canvas using Respondus and is available for a full 24-hour period on Wednesday, May 6, 2026 (ET).

Midterm Grades

Midterm grades will be posted in myUK by the deadline established in the Academic Calendar.

Academic Policies and Resources

Academic policy statements: https://www.uky.edu/academicombud/academic-policystatements (updated link) Academic offenses (including cheating, plagiarism, falsification/misuse of academic records): https://www.uky.edu/academicombud/academic-offenses-cheating-plagiarism-andfalsification-or-misuse-academic-records (updated link) Student Success resources: https://studentsuccess.uky.edu/ Emergency preparedness: https://police.uky.edu/emergency-preparedness (updated link)

Course Structure and Topics

The course rotates systematically between Concepts/Theory (typically Monday) and Empirical/Applications (typically Wednesday). The goal is to develop core economic intuition and analytical tools, then apply them to real-world policy settings, legal frameworks, and empirical evidence.

Chapter 1: Why Study Public Finance (p. 1)

Concepts/Theory

The four core questions of public finance (Section 1.1, p. 3) and the economic rationale for government intervention (Section 1.1, p. 4).

Empirical/Applications

Government budgets, spending and taxation patterns, deficits and debt (Section 1.2, pp. 11–18); institutions such as the Congressional Budget Office (CBO) (Section 1.1 APPLICATION, p. 9); policy motivation drawn from Social Security, health care, and education (Section 1.1 APPLICATION, p. 5; Section 1.3, p. 20).

Chapter 2: Theoretical Tools of Public Finance (p. 25)

Concepts/Theory

Budget constraints (Section 2.1, p. 31); utility maximization (Section 2.1, p. 26); demand and supply (Section 2.3, pp. 42–43); elasticities (Section 2.1, p. 33); efficiency (Section 2.3, p. 46); consumer and producer surplus (Section 2.3, p. 48); deadweight loss (Section 2.3, p. 49).

Empirical/Applications

Budget constraints with kinks and notches (Section 2.2, p. 36); labor supply responses (Section 2.2, p. 35); policy-relevant applications involving taxes, transfers, and subsidies (Section 2.2, p. 36; Section 2.4, p. 51).

Chapter 3: Empirical Tools of Public Finance (p. 59)

Concepts/Theory

Correlation versus causation (Section 3.1, p. 60); randomized controlled trials (Section 3.2, p. 62); observational data (Section 3.3, p. 67); quasi-experiments (Section 3.3, p. 74); difference-in-differences (Section 3.3, p. 74).

Empirical/Applications

Policy applications using experimental and quasi-experimental evidence (Section 3.2 APPLICATION, p. 65; Section 3.3, p. 74); difference-in-differences analyses in welfare, health, and development economics (Section 3.2, p. 64; Section 3.3, p. 74).

Chapter 4: Budget Analysis and Deficit Financing (p. 85)

Concepts/Theory

Definitions of deficits and debt (Section 4.1, p. 87); alternative measures of the government's fiscal position (Section 4.2, p. 92); present discounted value (Section 4.3, p. 98); short-run versus long-run budget constraints (Section 4.3, p. 97; Section 4.4, p. 104).

Empirical/Applications

Legislative and accounting approaches to deficit control (Section 4.1 APPLICATION, p. 89); present discounted value in practice (Section 4.3 APPLICATION, p. 98); financial shenanigans in budgeting (Section 4.3 APPLICATION, p. 103); role of entitlements and law in shaping long-run fiscal imbalances (Section 4.4 APPLICATION, p. 108).

Chapter 5: Externalities—Problems and Solutions (p. 113)

Concepts/Theory

Economic theory of externalities (Section 5.1, p. 115); private and public solutions (Section 5.2, p. 122; Section 5.3, p. 126); Pigouvian taxation (Section 5.3, p. 126); regulation (Section 5.3, p. 131); price- versus quantity-based policy instruments (Section 5.4, p. 132).

Empirical/Applications

Environmental and consumption externalities (Section 5.1 APPLICATION, p. 118); limits of private bargaining (Section 5.2, p. 124); policy tradeoffs across regulatory approaches (Section 5.3 APPLICATION, p. 127; Section 5.3 APPLICATION, p. 130); spillover effects (Section 5.1 EMPIRICAL EVIDENCE, p. 121).

Chapter 6: Externalities in Action—Environmental and Health Externalities (p. 143)

Concepts/Theory

Applying externality theory to environmental and health contexts (Section 6.1, p. 145; Section 6.3, p. 160); internalities and uncertainty (Section 6.3, p. 162).

Empirical/Applications

Environmental regulation (Section 6.1 EMPIRICAL EVIDENCE, p. 148); climate policy (Section 6.2 APPLICATION, pp. 153–157); smoking, obesity, and health-related externalities (Section 6.3, p. 160; Section 6.4 APPLICATION, p. 172); evidence from policy interventions (Section 6.4 EMPIRICAL EVIDENCE, p. 170).

Chapter 7: Public Goods (p. 179)

Concepts/Theory

Public goods (Section 7.1, p. 180); free riding (Section 7.2 APPLICATION, p. 186); optimal provision (Section 7.1, p. 183); private versus public provision (Section 7.2, p. 185; Section 7.3, p. 191); crowd-out (Section 7.3 EMPIRICAL EVIDENCE, p. 192).

Empirical/Applications

Evidence on free riding (Section 7.2 APPLICATION, p. 186); crowd-out (Section 7.3 EMPIRICAL EVIDENCE, p. 192); contracting out (Section 7.3 APPLICATION, p. 195); challenges in measuring preferences (Section 7.3, p. 199).

Chapter 8: Cost–Benefit Analysis (p. 207)

Concepts/Theory

Measuring costs and benefits of public projects (Section 8.1, p. 208; Section 8.2, p. 212); discounting and present discounted value (Section 8.2, p. 221); strengths and limitations (Section 8.3, p. 223).

Empirical/Applications

Valuation of time and life (Section 8.2 EMPIRICAL EVIDENCE, p. 214; Section 8.2 APPLICATION, p. 215); contingent valuation (Section 8.2 APPLICATION, p. 213); policy applications assessing costs and benefits (Section 8.2 EMPIRICAL EVIDENCE, p. 221; Section 8.3, p. 222).

Chapter 9: Political Economy (p. 229)

Concepts/Theory

Lindahl pricing (Section 9.1, p. 231); preference aggregation (Section 9.2, p. 234); majority voting (Section 9.2, p. 236); median voter theorem (Section 9.2, p. 240); representative democracy (Section 9.3, p. 242).

Empirical/Applications

Evidence on voting and representation (Section 9.3 APPLICATION, p. 246); polarization (Section 9.3 EMPIRICAL EVIDENCE, p. 249); lobbying (Section 9.3, p. 245); public choice perspectives on government failure (Section 9.4, p. 254; Section 9.4 EMPIRICAL EVIDENCE, p. 258).

Chapter 11: Education (p. 291)

Concepts/Theory

Economic rationales for intervention (Section 11.1, p. 294); human capital and productivity (Section 11.1, p. 294); externalities and credit market failures (Section 11.1, p. 295); redistribution (Section 11.1, p. 295).

Empirical/Applications

School choice and vouchers (Section 11.2, p. 298); competition in education markets (Section 11.3, p. 304; Section 11.3 EMPIRICAL EVIDENCE, p. 306); returns to education (Section 11.4 EMPIRICAL EVIDENCE, p. 309); school quality (Section 11.4 EMPIRICAL EVIDENCE, p. 311); role of government in higher education (Section 11.5 APPLICATION, p. 314).

Chapter 12: Social Insurance (p. 321)

Concepts/Theory

Insurance and risk aversion (Section 12.1, p. 323); adverse selection (Section 12.2, p. 327); moral hazard (Section 12.5, p. 338); economic rationales for social insurance (Section 12.2, p. 330; Section 12.3, p. 332).

Empirical/Applications

Insurance markets and social programs (Section 12.2 APPLICATION, p. 331); consumption smoothing (Section 12.4, p. 336); moral hazard (Section 12.5 APPLICATION, p. 339); policy design tradeoffs (Section 12.3 APPLICATION, p. 334; Section 12.6, p. 342).

Chapter 13: Social Security (p. 349)

Concepts/Theory

Program structure (Section 13.1, p. 350); consumption smoothing (Section 13.2, p. 360); redistribution (Section 13.1, p. 357); labor supply and retirement incentives (Section 13.3, p. 362).

Empirical/Applications

Savings and crowd-out (Section 13.2 EMPIRICAL EVIDENCE, p. 361); retirement behavior (Section 13.3 APPLICATION, p. 365); distributional effects (Section 13.1 APPLICATION, p. 356); policy debates and reform (Section 13.4 APPLICATION, pp. 368–376).

Chapter 19: Tax Incidence (p. 559)

Concepts/Theory

Statutory versus economic incidence (Section 19.1, p. 561); elasticities (Section 19.1, p. 565); partial- and general-equilibrium incidence (Section 19.2, p. 570; Section 19.3, p. 574).

Empirical/Applications

Distributional effects of taxation (Section 19.4, p. 579); incidence assumptions (Section 19.4, p. 579); real-world complications (Section 19.1 EMPIRICAL EVIDENCE, p. 570); taxing business owners versus employees (Section 19.3 EMPIRICAL EVIDENCE, p. 579).

Syllabus Change Notice

This syllabus is subject to change with reasonable notice. Any changes will be communicated via Canvas.