We are studying the effect of spatial frequency content on the perceived contrast of broadband images and the corresponding activity in early visual areas, as indicated by BOLD fMRI. Natural images (in this study, gray level photographs) have a characteristic "1/f" spatial frequency spectrum in which low spatial frequencies are more strongly represented than high spatial frequencies. Flattening the spatial frequency spectrum while maintaining the area under the power spectrum produces "whitened" images of the same RMS contrast. We used a psychophysical contrast-matching task to quantify the changes in perceived contrast that result from image whitening, and BOLD fMRI measurements of activity in early visual areas during presentation of natural and whitened images to study the relationship between perceived contrast and activity in early visual areas. We also measured contrast discrimination thresholds for the two image sets to compare against the BOLD data. Finally, we are taking advantage of the increased spatial resolution and signal specificity offered by high field functional imaging to investigate the relationship between these results and theories of efficient encoding in early visual areas. We have measured significant decreases in both perceived contrast and BOLD fMRI activity for the whitened images, relative to the natural images. A simple linear model of spatial frequency processing in multiple channels can predict this result. The higher contrast response predicts lower contrast discrimination thresholds for natural images than for whitened, but this is not observed in psychophysical measurements of threshold versus contrast for the two image sets. Preliminary results indicate increased spatial heterogeneity in BOLD signal during viewing of natural images.