Does home food production insure against food price shocks? Evidence from matched subsistence and market households in the Philippines

How do poor households smooth consumption when food prices spike? We argue that subsistence farmers, households producing a substantial share of their own food, possess a built-in insurance mechanism unavailable to market-dependent wage earners. Using propensity score matching to construct comparable household pairs and exploiting semester-level price variation across Philippine provinces, we estimate distinct price elasticities for each group. Using matched samples from the Philippine Family Income and Expenditure Survey (2018–2023), we find that market households exhibit a significant negative price elasticity (−0.36,p < 0.001) while subsistence households show near-zero price elasticity (+0.05, not statistically significant). The difference of 0.41 is highly significant (p < 0.001), consistent with the consumption smoothing hypothesis. Under a simulated 20% price shock, behavioral evidence confirms partial insulation: subsistence households' food spending barely adjusts (+0.9%), while market households cut spending by 6.4%. This 7.3 percentage point differential reflects an implicit income buffer from own-production. These findings indicate that home food production provides meaningful consumption smoothing, with crucial implications for rural development policies and targeted social safety nets.Impact StatementThis research highlights the critical role of agricultural self-sufficiency as an informal insurance mechanism against food price shocks in developing economies. By comparing demographically matched subsistence and market households in the Philippines, the study demonstrates that market-dependent households bear the brunt of price spikes through severe, welfare-reducing food expenditure cuts, whereas home production provides an effective behavioral buffer. This evidence advances the discourse on rural transformation by illustrating the distinct vulnerabilities inherent to different household livelihood strategies, offering actionable guidance for targeting formal safety nets and framing commercialization policies.