Assessing Household Welfare in Response to Rising Food Prices in The Gambia

ABSTRACT This study examines how rising food prices affected household welfare in The Gambia using nationally representative data from the 2015/16 Integrated Household Survey (IHS‐3). The analysis reflects household consumption behavior and market conditions prevailing during that period and provides a structural benchmark for understanding vulnerability in an import‐dependent economy. Using data from 5443 households, we estimate price and expenditure elasticities for four key food groups—cereals, animal products, roots and tubers, and fruits and vegetables through a censored Quadratic Almost Ideal Demand System (QUAIDS) model that accounts for zero consumption and nonlinear expenditure effects. Results reveal substantial heterogeneity across income groups and geographic locations. Poor urban households are most vulnerable to food price increases due to greater market dependence and limited substitution options, while rural households are particularly sensitive to cereal price shocks. Compensating variation estimates indicate that poor urban households require significantly higher income compensation to maintain welfare following price increases. Although structural conditions have evolved since 2015, the findings provide baseline evidence on household demand responses and distributional impacts of food price shocks in The Gambia.