Poor households in developing countries face large and varied risks. Many agriculture-dependent households, for example, are at risk of drought- or flood-induced crop failures or livestock deaths. The death of a family member often implies having to fund expensive burial ceremonies, and if the deceased was the household’s primary earner, replacing her/his stream of income is an even bigger problem.
Imagine you are running the recruitment process for a government agency and you are trying to attract high quality, public service oriented staff to work in difficult agencies. How should you do this? If you offer higher wages, maybe it will get you higher quality folks, but will you lose public service motivation? And how do you get these high quality folks to go to remote and dangerous areas?
To get children to attend school in developing countries, our approach has been primarily to assume that the schooling that is available is worth pursuing, meaning that the problem must be with some barrier to go to school despite a great desire to do so: perhaps the family cannot afford the costs of schooling; perhaps the schools are not good or too far; perhaps the children want to be in school but the parents prefer food today to educated daughter tomorrow; maybe people don’t know the value of schooling, etc.
Across developing countries, there is considerable under-investment in children's human capital; it is reflected in low immunization rates, child malnutrition, high drop-out rates, etc. Because of the (both individual and aggregate) long-term effects of human capital investment during childhood, governments across the globe have designed and implemented policies to encourage parents to invest more in the health and education of their children (numerous conditional cash transfer programs across countries are some examples).