CVM vs. Economic Impact: Substitutes or Complements?

February, 2002

Can a "ferocious" critic of arts economic impact (EIM) studies, who has labeled them a "fashionable excess," and called instead for more extensive use of alternatives such as contingent valuation (CVM) studies develop some belated sympathy for their continued use? Can something positive even be said about "naïve" economic impact (NEIM) studies that make the most basic error of failing to distinguish between plausible "net injections" of new economic activity into a region (e.g. via tourist spending) and mere "redistributions or diversions" of existing economic activity (e.g. via resident and other local sources of spending)? Is there some merit after all to identifying the "pecuniary externalities" common to all economic activity that are so clearly conceptually inferior to finding the "marginally relevant real externalities" that would provide clearer guidance to enlightened public policy? The surprising answer is a grudging "yes," but surprising only to someone unappreciative of the refrain: "familiarity breeds contempt."

Download the Working Paper