In this paper we present the analysis of the correlates of household living standards in Bosnia and Herzegovina, focusing the attention on the effects of alternative sets of location variables. Thehistorical development of BiH suggests that the territorial dimension is central in explaining povertyand vulnerability across the country. The results indicate that the regional classification proposed bythe country PRSP (based on the distinction among rural, urban and mixed municipalities) does notcapture the spatial patterns in household living standards adequately, while an analysis that relies on agreater geographical disaggregation or that introduces municipality-specific characteristics wouldimprove the understanding of these patterns. This result points to the relevance of an in-depth place-based approach when designing poverty reduction policies in this country