Business Economics

What are the parallels between parenting and running a business?

Some say parenting is a full-time job — constantly juggling multiple responsibilities and making decisions for the family. While some of those decisions require little deliberation, others lie in a gray area of parenting, without clear-cut answers.

Emily Oster, a professor of economics at Brown University, argues for a data-based approach to parenting to create better, happier outcomes for families in her new book, “The Family Firm: A Data-Driven Guide to Better Decision Making in the Early School Years.”

As a mother herself to two children, Oster uses her economics background to present a structured framework to make careful choices based on data, similar to how entrepreneurs make smart business decisions.

Click the audio player above to hear Oster’s conversation with “Marketplace” host Amy Scott.

The following is an excerpt from the book.

The more I thought about it, the more I realized we had started running our house like . . . well, like a firm. I hadn’t left my job behind in my home. I’d just switched out my statistical‑methods‑researcher hat for my former‑business‑school‑professor hat. Before I came to Brown University, I worked for five years at the University of Chicago Booth School of Business, teaching microeconomics to MBA students. I spent an awful lot of time explaining to my students there how to use tools from economics to organize their future business dealings, as well as mentoring students with big, entrepreneurial ideas.

It dawned on me that the lessons I tried to impart to them about running their businesses had value in how I ran my house. This idea crystallized for me when Jesse and I scheduled a meeting (using Google Calendar) with eight‑year‑old Penelope to discuss the school‑year schedule. We presented an agenda and draft schedule in advance. (Good meeting! Penelope and Jesse noted some errors in the documents I drafted, but I felt it was largely successful.)

I would argue that, in fact, many of the tools and processes you most need to manage this period of life are exactly the ones that many businesses use to function well. Yet I think even people who use these tools every day at work do not always see their parallel uses at home.

Let’s imagine your day job is managing the shampoo line at a haircare company. An opportunity comes up to purchase a smaller firm that makes a particular type of scented shampoo. There is a process to think about this. You’d likely start by asking whether this purchase fits with the mission of your firm (for example, maybe your firm’s motto is “All Natural, No Scents,” in which case this is probably not a good acquisition). You’d look at the data on their sales to see if it’s a successful brand. You’d have meetings, and you’d frame the decision in a specific way (“How many dollars should we bid for the company?”). You’d use scheduling tools, probably some kind of task‑management software, and you’d think about the benefits and costs of buying the smaller company. In the end, you’d decide, and then you’d move on to the next thing. There is an ease of process here, at least in theory, that we don’t often have at home.

Now think about a (possibly) familiar family scenario: travel soccer. Nine‑year‑old Sofia is invited to join the travel soccer team. She really, really wants to do it. Her best soccer friend is doing it. If you do not let her do it, you will literally ruin her life.

It may be tempting to approach this decision based on what is happening right in that moment—how much whining there is, what other parents are doing—or to go with your first basic gut instinct. But this decision deserves more attention than that. It’s four evening practices a week for the fall, plus one weekend day (at least!) spent at tournaments. If you say yes, this will be a huge part of your life. If you say no, though, see above—you will ruin Sofia’s life forever. Quite a trade‑off there.

This decision deserves the same attention you’d give to buying that scented shampoo company. Does this fit in your family’s “mission”? Is it consistent with your basic values, or the central pieces of family life that you find important (for example, family dinners might be key for you)? You need to look at the data. Are there risks (Concussions?) or benefits (Healthy lifestyle? Benefits of team sports?) to soccer you should be thinking about? You need to think about a specific question: Should Sofia sign up for travel soccer or . . . what’s the alternative? No soccer? Local soccer? Volleyball?
Just like in your shampoo firm, this decision will be helped by having some processes around it. Some meetings, perhaps some shared documents. You may not need to go as far as having a dedicated Slack channel, but this is a big enough choice that it likely makes sense to keep track of your discussions. At the end of all this, you get to a decision, hopefully one that is better thought out than one you’d make on the fly.

It probably does not escape you that this seems like a lot of work. And up front, there is no question that it is. Relative to going with your immediate gut instinct, deliberate decision making is going to take more time. But I’d argue that spending this time up front will save you time— and pain—later. If you decide to do this on a whim and then spend hours every week fighting about who is going to spend their weekend at the soccer tournament, that’s a lot of wasted time and lost family harmony.

In addition, sometimes making big decisions up front will allow you to make smaller decisions faster. This book will advocate taking serious time to think about the question of family meals: Which ones do you eat together, how do you prepare them, how do you coordinate? But once you’ve made decisions like those, other decision making may be very fast.

For example: My daughter Penelope’s main athletic activity is running, after a brief and unsuccessful foray into youth soccer. At some point around second grade, a fellow parent in the class told me about a youth running club that met twice a week at the local high school. It seemed on the face of it like it might be great for Penelope—an opportunity to run with someone who wasn’t me, a chance to have a teamlike atmosphere, exercise.

But when I looked into it, I found that it met at 6 p.m. One of the central organizing principles of our household is that we eat family dinner at 6 p.m. every night. So that made the decision for us—I didn’t even have to raise this with anyone else.

Your choice perhaps would be entirely different, but I’d argue that all families of school‑age kids would benefit from more ease of process.

This book is, at its core, a business book. The business of parenting. I’m going to outline a framework and some systems. A way to run your family a bit more like a firm. And I’m going to argue that this approach is suited to this new age of parenting.

Excerpt from “The Family Firm: A Data-Driven Guide to Better Decision Making in the Early School Years,” by Emily Oster, published by Penguin Press, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC. Copyright © 2021 by Emily Oster.