Economics of Education

Spring 2017
ECO 326L
Class 34190 TTh 9:30am-11:00am UTC 3.102
Class 34195 TTh 2:00pm-3:30pm UTC 4.102

Instructor:
Prof. Richard Murphy
Email: Richard.murphy@austin.utexas.edu
Office Hours: BRB 2.142, Wednesday from 2:00pm to 3:30pm
Teaching Assistant:
Class 34190
Mr. David Beheshti
Email: david.beheshti@gmail.com
Office Hours: BRB 4.126, Mondays from 10:30am to 12:00am
Class 34195
Mr. Alec Fletcher
Email: alecfletcher349@gmail.com
Office Hours: BRB 4.118, Thursdays from 11:00am to 12:30am
Course Objectives
In this course you will develop and understanding of how economists approach questions in the field
of education. The course will illustrate how basic economic principals such as incentives, resource
allocation and market forces can be applied to educational settings. Through discussions of
academic papers the course will also provide a very basic grounding in how economists evaluate
education policies. The main objective of this course is to combine theory with empirical findings. By
the end of semester the goal is for you to have the tools necessary to critically analyse current policy
issues in education.
Format
The course will consist of a series of lectures followed by discussions within the classes. Students are
expected to arrive to class prepared for the topic of discussion and potential in-class activities by
reading any pre-specified texts. The course will consist of two midterms and a final exam.
Prerequisites
The prerequisites for this course are ECO 420K (Microeconomic Theory) with a grade of at least COffice Hours
Prof. Richard Murphy: Mondays from 2:00pm to 3:30pm
Mr. David Beheshti: : BRB 4.126, Mondays from 10:30am to 12:00am
Mr. Alec Fletcher: BRB 4.118, Thursdays from 11:00am to 12:30am

Students are free to drop by during these times. To guarantee a meeting, students can schedule 15
minute appointments via email. Appointments at other times must be arranged via email.
Appointments can be scheduled up to two weeks in advance.
Textbook
The required textbook for this course is Economics of Education (2015), by Michael Lovenheim and
Sarah Turner. There is no other textbook on the Economics of Education that is suitable for the
undergraduate level. The book is still currently in development, however the authors have given
their permission to for us use the book in its current form. This means that the cost of the textbook
should be considerably cheaper than the final published version. The textbook is available from the
University Co-op in digital and hardcopies.
Course Policies
Class Attendance: Classes take place on Tuesdays and Thursdays, students are expected to attend all
their allotted classes. I also expect students to be on time. Students are responsible for all the material
covered in class. Any material presented in class may appear on exams.

Be Prepared: I expect all students to have completed the readings before class. I will set any
appropriate readings during the previous class. I will invite participation and will call on students
directly.
Group Work: On occasion there will be in class group activities. Students are expected and
encouraged to actively and frequently participate in class discussion. Students are also expected to
create a respectful environment that is conducive to learning. Students should respect each other
and each others opinions.
Class Slides: Before each lecture I will post slides on Canvas that will be covered. The intention is for
you to annotate these during the classes. They are not intended to be a comprehensive set of notes
for the class. You may print these out or view them directly from your laptop or personal device.
Technology: I allow the use of laptops (or other electronic device) in class to follow the class slides.
Any student found to be engaged in non-class-related activities on their electronic device will be
asked to turn it off for the remainder of class. Phones should be set to silent and not be used to
communicate during class time. Students found to be texting during class will be asked to turn off
their phones. Students are allowed to make audio recordings of the lecture, to aid personal
recollections, but are prohibited from upload them on to the public internet.
Canvas: This class will use Canvas to distribute course materials, communicate, and post grades.
Therefore you should be become familiar with this web-based course management system, which
can be accessed at http://canvas.utexas.edu/. Support for how to use Canvas can be found here
https://utexas.instructure.com/courses/633028/pages/welcome-to-canvas.
Email: Students are expected to monitor their email for class related communications from me, the
TA, or Canvas. Please do not send emails from accounts that you do not check regularly. All
correspondence should reflect the professional nature of the professor/student relationship. This
means that all emails to myself or to the TA should follow standard professional correspondence
rules. Specifically, your emails should begin with a salutation (Dear ). Make sure to always include
your name when you close your email (i.e. sincerely, thank you, etc.). All emails must contain the
course name, ECO 350K, in the subject line. Failure to include the course name in the subject may
result in not receiving a reply to your email.

In-Class Activities
Attendance is not a direct component of the course grade However, throughout the semester this
class will discuss various topics. In order to increase your competency articles, discussion questions,
and case studies will be reviewed in class. In order to be prepared to complete these assignments, it
is necessary to read all assigned material prior to class. Assignments will be passed out during class,
and you will be expected to participate fully. All assignments will be due at the end of the class
period, and you will receive 1% of your final grade for completing the assignment. If you miss a class
where an assignment is completed, you will forfeit that 1%. There will be 10 official In-Class
activities, each worth 1%. Therefore, missing all of these means the maximum score achievable
would be 90%. Make-up assignments will only be given for documented excused absences, as
outlined below (see Grading, University Policies).
Exams
This course will have two mid-term examinations and one final exam. The mid-terms will take place
on Thursday the 23rd of February and Tuesday the 11th of April, during the class. The final exam for
Class 34190 will be on Tuesday, May 16, 9:00-12:00 noon. The final exam for Class 34195 will be on
Friday, May 12, 9:00-12:00.All exams will be a combination of short answer questions followed by
longer form questions, covering topics from the previous classes. This means that the examinations
will be cumulative and may incorporate aspects content that has already been tested. The final exam
will draw from the entirety of the course.
The exams are completed individually, and are closed book and closed notes. Calculators are, but no
other electronic devices will be allowed on exams. Any calculations needed will be basic.
Grading
Each mid-term examination will count for 25% of the final grade, and the final exam will contribute
the remaining 40%. Students will be given a score that ranges between 0 and 100. After each midterm I will also provide feedback through the form of an estimated letter grade. This will solely be
based on the examinations completed up to that point, and so should not be considered as a
prediction of your final grade.
At the end of the semester, a composite grade will be generated by weighting the individual
components according to the indicated percentage contribution to the final grade. These final
grades will then be curved to assign individual letter grades, including plusses and minuses.
Students are expected to take all exams at the scheduled dates and times. It is not possible to have
make-up exams" and it is not possible to change the schedule of the exams. There is an exception
of Religious Holidays (detailed in University Policies below), where written (email) notice 14 prior to
the exam is expected.
If an exam is missed, then a score of 0 will be received for that exam. If a midterm exam is missed
due to a valid reason that is unavoidable and outside of the control of the student (e.g. a medical
emergency or family emergency), and satisfactory evidence of the validity is provided to the
instructor, then the examination will be omitted and the score of zero will not be counted towards
the students final grade.
If the final exam is missed due to a valid reason (as defined above), then a grade of Incomplete may
be temporarily assigned for the course grade until the missed final exam can be resolved. The
assignment of a grade of Incomplete is subject to the discretion of the instructor, and will include
(among other things) a consideration of the student's performance in the course prior to the final.

Any questions about grading must be brought to either my or the TAs attention within a month of
date that the work is returned to the student.
Grading Summary
Mid-term 1: February 23rd (During Class),
Mid-term 2: April 11th (During Class),
In-Class Activity: Throughout Course
Final Exam: May 12th / 16th

25%
25%
10%
40%

University Policies
Academic Integrity: Each student is expected to abide by the University of Texas Honor Code. The
core values of The University of Texas at Austin are learning, discovery, freedom, leadership,
individual opportunity, and responsibility. Each member of the university is expected to uphold
these values through integrity, honesty, trust, fairness, and respect toward peers and community.
During examination, you must do your own work. Talking or discussion is not permitted during the
examinations, you may not copy or collaborate in any way from others.
Disabilities: Students with disabilities may request appropriate academic accommodations from the

Division of Diversity and Community Engagement, Services for Students with Disabilities at 4716259
(voice) or 2322937 (video phone) or http://www.utexas.edu/diversity/ddce/ssd. Faculty are not
required to provide accommodations without and official an official accommodation letter.
Religious Holy Days: By UT Austin policy, you must notify me of your pending absence at least
fourteen days prior to the date of observance of a religious holy day. If you must miss a class, an
examination, or a work assignment in order to observe a religious holy day, I will give you an
opportunity to complete the missed work within a reasonable time after the absence.
Behavior Concerns: If a student is worried about someone who is acting differently, he or she may
use the Behavior Concerns Advice Line (BCAL) to discuss by the concerns by phone. This service is
provided through a partnership among the Office of the Dean of Students, the Counseling and
Mental Health Center (CMHC), the Employee Assistance Program (EAP), and the University of Texas
Police Department (UTPD). Call 2325050 or visit http://www.utexas.edu/safety/bcal.
Campus Carry: Texas state law now authorizes licensed adults to carry a concealed handgun in
University classrooms. The law requires that the handgun be completely concealed at all times.
Please note that in accordance with University guidance, the instructor intends to call 911
immediately and report the carrier to police if a handgun is seen at any time. In addition, please be
advised that the instructors office, is a gun-free zone.

Course Schedule
This represents the current planned class objectives. However, as I cannot accurately predict the
future, some classes may take longer than expected, and some less. Therefore, this only be used as a
guide of what I intend to cover when.
Week
1
1
2
2
3
3
4
4
5
5
6
6
7
7
8
8

9
9
10
10
11
11
12
12
13
13
14
14
15
15
Finals

Date
17 January
19 January
24 January
26 January
31 January
02 February
07 February
09 February
14 February
16 February
21 February
23 February
28 February
02 March
07 March
09 March
14 March
16 March
21 March
23 March
28 March
30 March
04 April
06 April
11 April
13 April
18 April
20 April
25 April
27 April
02 May
04 May
12/16 May

Topic(s)
Syllabus Outline
Introduction Economics of Education
Markets in Education
Causation & Correlation
Empirical Tools
Empirical Tools
Human Capital
Signalling Model
Private Returns to Education
Social Returns to Education
Recap
Mid Term
Education Production Function
Out of School Factors
School Finance
School Inputs
Spring Break
Spring Break
School Inputs
School Types
School Accountability
Teacher Impact
Teacher Labour Markets
Recap
Mid Term
Market for Higher Education
Student Finance
Student Finance
Economics of Pre-College Life
Economics of College Life
Importance of Class Rank
Recap
Final Exam 9am

Chapter
1
2
3
3
3
4
5
6
6

7
9

10
11
12
12

13
14
14
15
15