UBN-PL Method

THE UBN-PL METHOD is a way to measure poverty using dual criteria for defining poverty. One criterion is unmet basic needs (UBN). Under the UBN criterion, a household is considered poor if it lacks access to any number of basic necessities such as clean water and sanitation facilities, basic education, and adequate housing. The inclusion of goods and services into the UBN criteria often depends largely on the availability of data. One significant difficulty of the UBN method is that the poverty rate depends largely on the number of categories chosen to include as basic needs: the more basic the needs selected, the more likely it is for a household to fail to meet the minimum standards for at least some of these needs.

The other criterion is the poverty line (PL). Under the PL criterion a household is considered poor if its annual income falls below a predetermined level known as the poverty line. The poverty line can be determined either through the standard food or consumption basket variant, in which the poverty line is based on the cost of purchasing a designated bundle of goods and services, or by the relative income standard, whereby the poverty line is defined as a fraction of a country's average income. It can be difficult to compare poverty lines among countries because of differences in the composition or costs of each country's food or consumption basket. International agencies have attempted to correct for this deficiency in the poverty line by standardizing definitions of what constitutes poverty. The most commonly used standardized measure of poverty is the “$1-a-day” level, which corresponds to an annual income of $365 adjusted for inflation and international differences in costs of living (also known as purchasing power parity, or PPP).

It can be argued that neither criterion on its own is a comprehensive measure of poverty, as each criterion on its own may identify significantly different groups as poor. For example, a household above the poverty line may live in an area with inadequate infrastructure that cannot easily be purchased despite a high income. Similarly, it is hard to argue that a household with no income is not in poverty even if many of its basic needs are met through public expenditures. In fact, in empirical studies of urban households in Latin American countries, only between 25 percent and 40 percent of households considered poor by one criterion are considered poor by the other. The UBN-PL method uses both of these independent measures simultaneously to [Page 1084]measure poverty by counting any household whose income is below the poverty line and/or has one or more unmet basic needs as poor. In other words, under the UBN-PL method a household is considered in poverty if it fails either criterion. Of course, measuring poverty in this way must lead to a higher incidence of poverty than by using either single method on its own. Indeed, the UBN-PL method has been used primarily for examining poverty in Latin America and has found area-wide poverty rates of 56 percent in 2000, significantly higher than PL-alone rates of around 44 percent for the same period.

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