Lecture, three hours. Preparation: completion of first-year microeconomics and graduate econometrics courses. In past decade economists have learned remarkable amount about how society works. Increased understanding has come about through application of distinctively economic methods of research--explicit mathematical models and eclectic statistical techniques--to topics such as healthcare, crime, education, and immigration. Taken together this work has led to increased understanding of inequality, how to measure it, how inequality has increased in U.S., how America differs from other rich countries and, most important, what causes inequality. Study of this work, with focus on two important influences on inequality--education and health--which are two areas in which knowledge is accumulating most rapidly. S/U grading.