Predicting the probability of conversion to natural gas in the Fairbanks Northstar Borough

Abstract

In 2013 a phone survey was conducted for Northern Economics Inc. by Ivan Moore Research Group, with the goal of determining the willingness of households in the Fairbanks North Star Borough to convert their residence to natural gas. This paper provides an analysis of prior household discrete choice experiments involving energy usage. Probit regression is used to determine the probability of conversion given different levels of household income, payback period, cost of conversion, and annual saving associated with conversion, in addition to these variables three statistically significant attitudinal variables are included. Marginal effects and elasticities are presented and interpreted. Findings are congruent with past research and indicate that to maximize the conversion rate of households, the cost of conversion needs to be minimized or, if possible, subsidized and the annual level of saving maximized. Initial results suggest conversion cost is weighed more heavily than annual savings.