determining the level of the provision of the good. Contingent markets are highly structured with scenarios designed to elicit contingent valuation: If this happens, what would you be willing to pay? This is a different process from determining peoples' attitudes or opinions about a subject (Cummings, Brook shire, and Schulze 1986; Bjornstad and Kahn 1996; Smith 2003; Haddix et al. 2003; Drummond et al. 2005).
Economists have traditionally preferred to rely on direct observation of individuals' behavior rather than on their responses to hypothetical questions about that behavior. However, the contingent valuation method has been widely used in the environmental area, particularly to evaluate willingness to pay for nonuse or existence values of environmental goods (Cummings, Brookshire, and Schulze 1986; Mitchell and Carson 1989; Carson 1991; Portney 1994; Hanemann 1994).Environmental economists argue that people may value the preservation of natural assets such as the Grand Canyon even if they never plan to visit or directly use it (Freeman 1993).This is called an existence value.
Contingent valuation methods have been subject to much professional debate about their accuracy, validity, and reliability (Cummings, Brookshire, and Schulze 1986; Diamond and Hausman 1994; Bjornstad and Kahn 1996; Smith 2003; Drummond et al.2005). Although a conference of experts evalu ating contingent valuation methods considered them to be "generally positive" (Cummings, Brookshire, and Schulze 1986), the controversy over the use of these methods continues. Much research has focused on validating contingent value estimates (i.e., comparing stated willingness to pay with actual willing ness to pay). David Bjornstad and James Kahn (1996, 273) noted that current contingent valuation methodologies "are not universally accepted as valid, reliable, and unbiased," and that ongoing issues in environmental policy "provide an immediate and pressing need to develop stronger estimates of the value of changes in the quantity and quality of environmental resources, particularly those associated with passive use values." Smith (2003) argued that contingent valuation studies in health care generally performed poorly in the construction, specification, and presentation of the contingent market and that there had been little improvement in the previous fifteen years, especially compared with environmental studies. These authors noted that environmental studies often had vast, nonreversible financial and nonfinancial impacts.
O'Brien and Gafni (1996) and Drummond et al. (2005) noted the differences between the ex ante and ex post approaches to evaluating willingness to pay.1? the ex post approach (based on the perspective of the user), the respondent IS assumed to be.at the point of consuming some amount of the program g evaluated and IS asked about the willingness to pay for that amount. With the ex ante approach (based on the perspective of the insurance provider)