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Improvements in water supply and sanitation facilities have been proposed as a solution to the scourge of diarrheal diseases in developing countries. However, the research literature suggests that while such improvements may be necessary to reduce the transmission of diarrheal pathogens, alone they are not sufficient. Other factors that may complement or modify the health effects of improved water supply and sanitation must also be considered as part of the effective planning and implementation of community development programs. This dissertation analyzes data from the Philippines and Malawi to identify these other factors, measure the importance of their health effects, and estimate the cost-effectiveness of their application. Mother's education modifies the effect of water supply and sanitation on diarrhea in young children in both the Philippines and Malawi. In the Philippines, improved drinking water and toilets reduced the probability of diarrhea only where mothers have four to nine years of education. Likewise in Malawi, improved drinking water reduced the probability of diarrhea only when mothers had more than four years of education. In both countries, feeding and hygiene behavior, factors closely related to maternal education, were found to have stronger and more consistent associations with childhood diarrhea than did improvements in water supply or sanitation, regardless of the level of mother's education. Among intervention strategies for reducing diarrheal morbidity in young children, efforts designed to change the hygiene behavior of mothers, either through additional years of schooling or hygiene education, were shown to be the most cost-effective, costing $1 to \$2 per episode of diarrhea averted versus $165 to \$185 per episode averted for providing cleaner water through public standpipes. Given the substantial social and economic benefits of improved water supply and sanitation, beyond those considered here, educational programs to promote better hygiene behavior may produce their greatest benefits as complements to water supply and sanitation programs rather than replacements.