Contingent Valuation of Environmental Goods

CV studies ask respondents whether they are WTP a specified dollar amount for a program or improvement that has been described to them. Different dollar amounts -called cost prompts, or bids -are asked of different respondents to obtain the variation in cost that is needed to estimate mean WTP. The question arises: how sensitive are CV estimates to the researchers' choice of cost prompts? The answer seems to be: tremendously. environmental goods seems to be evidenced neurologically. For the first three classes, activity was evidenced in the traditional valuational area of the brain, as expected. However, for the environmental proposals, activity was not evidenced in this valuational area. Instead neurological activity appeared in a region of the brain that is associated with cognitive control and shifting decision strategies. Neural measurement is fairly new in economics, and further research is required before conclusions can be drawn. But at face value, the results are consistent with McFadden's assessment that respondents do not know how to approach the CV questions about environmental goods and are struggling for ways to approach the task.